Do I Need to Take an RMD From My 401k If I’m Still Working?

If you’re still working past 73, you generally don’t have to take a required minimum distribution from your current employer’s 401(k) until the year you retire. That’s the “still-working exception,” and it answers the question of whether you need to take an RMD from your 401(k) if you’re still working: not from the plan at the job you still hold, as long as you don’t own more than 5% of the company and the plan itself allows the delay. Every other retirement account you own follows the normal schedule.¹

The Two Conditions You Have to Meet

The exception applies to your current employer’s 401(k), 403(b), or other qualified workplace plan. Two things have to be true.

First, you can’t be a 5% owner of the business sponsoring the plan. For a partnership or unincorporated business, that means holding more than 5% of the capital or profit interest. For a corporation, it’s more than 5% of the outstanding stock or the total combined voting power. If you cross the 5% threshold in the year you reach RMD age, you have to start withdrawals at 73 even though you’re still on the payroll.¹

Second, the plan document has to 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.²

If you work for two employers at the same time and participate in both plans, each plan is evaluated on its own. You can defer RMDs from both simultaneously as long as you meet the conditions for each one.

Which Accounts the Exception Doesn’t Cover

The still-working exception is narrow. It shields only the plan sponsored by the employer you currently work for. Several other accounts keep paying out 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. Employment status is irrelevant. If you’re 74 and still working full time, you still owe an RMD from every traditional IRA you own.³

401(k) Accounts From Former Employers

A 401(k) sitting at a company where you no longer work is not protected by your current job. Those accounts must start paying out on the standard schedule, and each one calculates and pays its own RMD separately. You can’t pull one plan’s RMD from a different plan.⁴

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 account within 10 years of the original owner’s death. Still working doesn’t change that. A limited group of beneficiaries, including 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.¹

Roth 401(k) and 403(b) Balances Owe No RMDs at All

Designated Roth accounts inside a 401(k) or 403(b) are fully exempt from RMDs during your lifetime. This change took effect for the 2024 tax year under SECURE 2.0 and put workplace Roth accounts on the same footing as Roth IRAs, which have never been subject to lifetime RMDs.² If your entire 401(k) balance is on the Roth side, there’s no RMD obligation from that account regardless of your age or whether you’re still working.

Rolling Older Accounts Into Your Current Plan

Here’s where the exception becomes a planning tool. 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.²

Timing matters. You have to complete the rollover before the RMD for that year comes due from the source account, because the RMD amount itself can’t be rolled over. The IRS treats it as a required distribution, not eligible for transfer.¹ The practical sequence: take the RMD from the source account first, then roll the remaining balance into your current plan before year-end. And the 5% ownership limit still applies. If you own more than 5% of the current employer, rolling assets in won’t shield them.

When RMDs Finally Kick In

The RMD age is currently 73. If you turned 73 between 2023 and 2032, you fall under that threshold. Starting in 2033, the age rises to 75.¹

Once you retire from the employer whose plan you’ve been deferring, the first RMD from that plan is due by April 1 of the following year. That April 1 grace period sounds generous, but it can back you into taking two RMDs in the same calendar year, since the second one is due by December 31 of that same year. For many people it’s cleaner to take the first RMD in the retirement year itself.⁵ After that, every RMD is due by December 31 of each year.

What Happens if You Miss One

The penalty for failing to take a full RMD by the deadline is 25% of the shortfall. That rate dropped from 50% under SECURE 2.0, but it’s still steep.¹

Catch the mistake within two years and take the missed distribution, and the penalty drops to 10%. You can also request a full waiver by filing IRS Form 5329 with a letter explaining why you missed the deadline. The IRS reviews the explanation and decides whether the shortfall was due to reasonable error and whether you’re taking steps to correct it.⁶ Plan administrator errors, serious illness, and confusion around changing jobs are the kinds of circumstances that tend to support a waiver, but the IRS doesn’t publish a definitive list, so the explanation needs to be specific to your situation.

1
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
2
Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
3
Internal Revenue Service. RMD Comparison Chart (IRAs vs. Defined Contribution Plans)
4
Internal Revenue Service. 401(k) Resource Guide – Plan Participants – General Distribution Rules
5
Internal Revenue Service. IRS Reminds Retirees: April 1 Final Day to Begin Required Withdrawals From IRAs and 401(k)s
6
Internal Revenue Service. Instructions for Form 5329 (2025)