If you are still working past age 73, you generally do not have to take a required minimum distribution from your current employer’s 401(k) — but only from that specific plan, and only if you meet two conditions. You cannot own more than 5% of the company, and the plan document itself must allow the delay. Every other retirement account you own, including traditional IRAs and 401(k) balances left at former employers, still follows the standard RMD schedule regardless of whether you are collecting a paycheck.
How the Still-Working Exception Works
The exception lets you delay RMDs from your current employer’s 401(k), 403(b), or other qualified workplace plan for as long as you remain employed by the company that sponsors it. Your first RMD from that account becomes due by April 1 of the year after you finally retire.1Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
Two conditions have to be met.
First, you cannot be a 5% owner of the business. For partnerships or unincorporated businesses, that means holding more than 5% of the capital or profit interest. For corporations, it means holding more than 5% of the outstanding stock or more than 5% of total combined voting power.1Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs If you cross that 5% threshold in the year you reach RMD age, you must start withdrawals at 73 even though you remain on the payroll.
Second, the plan document must permit the delay. Not every plan does. Some require distributions to begin at 73 regardless of employment status, so check with your plan administrator before assuming you qualify.2Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
If you work for two employers at the same time and participate in both of their plans, the exception can apply to each plan independently. Each plan evaluates the deferral based on your employment with its own sponsor, so you could defer RMDs from both plans at once as long as you meet the conditions for each.
Accounts the Exception Does Not Cover
The still-working rule is narrow. It applies only to the plan sponsored by the employer you currently work for. Several other account types keep running on the standard schedule no matter how long you keep working.
Traditional, SEP, and SIMPLE IRAs
Every traditional IRA, SEP IRA, and SIMPLE IRA requires distributions starting by April 1 of the year after you turn 73. Your employment status is irrelevant.3Internal Revenue Service. RMD Comparison Chart (IRAs vs. Defined Contribution Plans) If you are 74 and still working full time, you still owe an RMD from every traditional IRA you own.
Old 401(k) Accounts From Former Employers
A 401(k) left behind at a company where you no longer work is not sheltered by your current job. Those accounts must start paying out on the standard schedule. Each old 401(k) must be calculated and paid separately. You cannot satisfy one plan’s RMD with a withdrawal from another plan.4Internal Revenue Service. 401(k) Resource Guide – Plan Participants – General Distribution Rules
Inherited Retirement Accounts
If you inherited a 401(k) or IRA from someone who died after 2019, the SECURE Act generally requires you to empty the entire account within 10 years of the original owner’s death. Still working does not override that rule. A limited group of beneficiaries — surviving spouses, minor children, disabled individuals, and people no more than 10 years younger than the deceased — may stretch distributions over their own life expectancy instead.1Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
Rolling Old Accounts Into Your Current Plan
Here is where planning changes the outcome. If your current employer’s plan accepts incoming rollovers, you can move money from a traditional IRA or an old 401(k) into it. Once the money is inside the current employer’s plan, it falls under the still-working exception and stops generating mandatory withdrawals while you remain employed.2Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
Timing matters. You must complete the rollover before the RMD for that year comes due from the source account. The RMD amount itself cannot be rolled over, because the IRS treats it as a required distribution and not as eligible rollover money.1Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs So if you turn 73 and want to shield an old 401(k), take that account’s RMD first, then roll the remaining balance into your current plan before year-end. The 5% ownership restriction still applies. If you own more than 5% of the current employer, rolling assets in will not help.
Roth 401(k) Balances Are Already Off the Hook
Designated Roth accounts inside a 401(k) or 403(b) are exempt from RMDs during your lifetime. This change took effect for the 2024 tax year under SECURE 2.0, putting workplace Roth accounts on the same footing as Roth IRAs, which were never subject to lifetime RMDs.2Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs) If your entire 401(k) balance sits on the Roth side, you have no RMD obligation from that account regardless of your age or employment status.
Penalties for Missing an RMD
If you skip or underpay an RMD you actually owe — from an IRA, an old 401(k), or your current plan once the exception no longer applies — the penalty is 25% of the shortfall.1Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs That rate dropped from 50% under SECURE 2.0, but 25% of a missed withdrawal is still a steep price.
Catch the mistake quickly and take the missed distribution within two years, and the penalty drops to 10%.1Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs You can also request a full waiver by filing IRS Form 5329 with a letter explaining why you missed the deadline. The IRS will review your explanation and decide whether the shortfall was due to reasonable error and whether you are taking steps to fix it.5Internal Revenue Service. Instructions for Form 5329 (2025) A plan administrator’s error, serious illness, or confusion caused by changing jobs are the kinds of situations that tend to support a waiver, though the IRS does not publish a definitive list.
Charitable Transfers for IRA RMDs You Cannot Defer
If you are 70½ or older and charitably inclined, a qualified charitable distribution lets you transfer money directly from a traditional IRA to a qualifying charity. The transfer counts toward your RMD for the year but is excluded from your taxable income.6Internal Revenue Service. Important Charitable Giving Reminders for Taxpayers For 2026, the annual QCD limit is $111,000 per person.
This is especially useful if you are still working and already covering your living expenses with a salary. Directing an IRA RMD to charity through a QCD keeps that money off your tax return entirely. QCDs are available only from traditional IRAs. You cannot make one from a 401(k) or 403(b), even after you retire.