At 75 He Still Has a Paycheck and Still Hasn’t Taken a Single RMD From His 401(k). The Exception Is Written Into the Law, and the IRA Down the Street Doesn’t Get It

David Beren

Mon, September 21, 2026 at 4:33 PM GMT+3 5 min read

Quick Read

Still-working employees 73+ can legally skip 401(k) RMDs until retirement, but the exception requires four conditions. Miss one and the IRS collects anyway.
IRAs never qualify for the still-working exception, and old 401(k)s from prior employers stay on the normal RMD schedule regardless of current employment.
An unnecessary RMD stacked on wages can trigger IRMAA surcharges, pushing Medicare Part B premiums to $689.90 monthly two years later.
Read More: Avoid these 13 retirement mistakes before they derail your future (sponsor)

If you are still drawing a paycheck at 73 or older and your retirement money sits in a workplace 401(k), federal law lets you skip required minimum distributions from that plan until the year you actually retire. The still-working exception is real; it is written into the tax code, and it is one of the most misunderstood rules in retirement planning. If you miss even one of its four conditions, the IRS treats you like everyone else.

Bartolomiej Pietrzyk / Shutterstock.com

What the Code Actually Says

The rule lives in Internal Revenue Code §401(a)(9)(C). Your "required beginning date" for a workplace plan is April 1 of the year after the later of two events: the year you turn 73, or the year you retire. For IRAs, only the age trigger counts. SECURE 2.0 kept the age at 73 for anyone reaching that age between 2023 and 2032, and moves it to 75 starting in 2033.

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Four Gates, Four Ways to Lose the Shelter

Gate one: your plan has to adopt the exception. It is permitted, not mandatory. Plenty of plans force distributions at the statutory age regardless of employment. Read the summary plan description before you assume.
Gate two: it covers only the plan of the employer you currently work for. Any 401(k), 403(b), or 457(b) you left behind at a prior job is on the normal schedule. A stack of old plans across three former employers means three sets of RMDs due this year even if you are still punching a clock somewhere new.
Gate three: it does not apply to IRAs. Ever. Traditional, SEP, SIMPLE, rollover, it does not matter. If you turned 73 and hold an IRA, the required beginning date arrived on schedule. Continued employment changes nothing.
Gate four: you cannot be a "5% owner" of the business sponsoring the plan. IRC §416(i) sets the threshold, and IRC §318 attribution rules can treat you as owning stock held by your spouse, children, grandchildren, and parents. Owners of family businesses routinely trip this wire and do not know it until an auditor asks.

Consolidation Move Most People Miss

Because the shelter only covers your current employer's plan, moving other retirement money into that plan brings it under the same umbrella. If your plan accepts incoming rollovers (again, permitted, not required), you can roll pre-tax IRA balances and old 401(k)s in and postpone distributions on the combined balance.

The counterweights are real, as workplace plans usually offer narrower menus and can carry higher administrative costs than an IRA. Assets inside a plan are less flexible: no qualified charitable distributions, tighter withdrawal rules, harder to move while employed. Rolling pre-tax IRA money into a 401(k) also empties your pre-tax IRA balance, which clears the way for a clean backdoor Roth contribution because the pro-rata rule looks only at IRA balances.

Why the Deferral Is Worth More Than It Looks

A worker past the RMD age who is still earning a salary would stack a forced distribution on top of wages at the highest marginal rate of the decade (we walked through how to defuse that first-year tax bill years ago in a free guide here). Add the Medicare tripwire. For 2026, income-related monthly adjustment amounts start once modified adjusted gross income exceeds $109,000 for individuals and $218,000 for joint filers, with a two-year lookback. An unnecessary distribution in 2026 shows up on your 2026 return and raises your Medicare Part B and Part D premiums in 2028. The top Part B tier in 2026 pushes the total monthly premium to $689.90.

Year You Actually Retire

For this purpose, retirement means a full separation from service. Cutting back to part-time generally does not qualify if you remain an employee. If you get rehired the following year, the clock does not reset. Roth balances inside a 401(k), as of 2024 under SECURE 2.0, are no longer subject to lifetime RMDs, so the still-working question is moot for those dollars. When you do retire, your first distribution is due by April 1 of the following year, and the second is due by December 31 of that same year, which is how retirees end up with two taxable withdrawals in one calendar year.

Ask your plan administrator for two documents before you count on any of this: the summary plan description, to confirm the still-working exception and the rollover-in provisions, and a written statement of your ownership percentage under the §318 attribution rules. Everything else follows from those two pages.

Help Avoid These 13 Retirement Mistakes Before They Derail Your Future

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