Still Working at 73? The IRS Lets You Skip RMDs on Your Current Employer’s 401(k) but Not on the IRA You Rolled Your Last One Into

• Still-working employees past 73 can defer 401(k) RMDs until retirement, but rollover IRAs and old employer plans must pay out starting at 73.

• A $680,000 rollover IRA triggers roughly $25,660 in taxable withdrawals in 2026, while a current employer's $410,000 401(k) keeps compounding untouched.

• Owning more than 5% of the sponsoring business kills the exception entirely, and family attribution rules count shares held by a spouse or child.

• Two retirees, same $1 million, same 4% rule, buy one finished with $1.4 million, the other hit $0 in 12 years. Our free reader guide explains the flaw that separated them, and the income-first method built to avoid it.

You turned 73 in 2026, you're still on payroll, and your HR benefits portal shows a healthy 401(k) balance. Good news: the IRS says you can leave that account alone. The traditional IRA you built by rolling over a 401(k) from the job you left in 2019? Different story. That one has to start paying out.

The rule doing the work here is the still-working exception to required minimum distributions. It lives in the tax code at Section 401(a)(9)(C) and it applies only to the qualified plan of the employer you currently work for. Not the IRA down the hall. Not the 401(k) at the last place. Just the one tied to the W-2 you're still collecting.

How the Exception Actually Works

Normally, the year you hit age 73, the IRS forces you to start pulling money out of tax-deferred accounts on a schedule set by the Uniform Lifetime Table. Miss a distribution and the penalty is 25% of the amount you should have taken, reducible to 10% if you correct it promptly.

The still-working exception carves out one narrow reprieve. If you're employed by the company sponsoring the plan on December 31 of the distribution year, and the plan document allows it (most do, but confirm), you can defer RMDs from that specific 401(k) until April 1 of the year after you actually retire.

The 4% Rule is Broken, Built On A World That No Longer Exists

Every retiree knows about the 4% rule, but it frames retirement as a slow liquidation and still causes retirees with seven-figure accounts to agonize over a dinner out.

There's a different way to run the math that makes more sense today. Build an income floor — dividends, interest, and Social Security that cover your essential bills every month — and you never have to sell shares into a down market just to pay them.

Our free reader guide, The 4% Rule Is Broken, walks through it in about 15 minutes. Access the report here.