Do You Have to Take an RMD If You're Still Working?

Cardio Renal Foundation is a 501(c)(3) tax-exempt charity organization. Your donation advances our mission to provide a solution beyond dialysis.

You are past the age when required withdrawals usually begin — 73 for most people reading this page — and you are still on the job, still drawing a paycheck, in no hurry to retire. So the question is a fair one: does the IRS really make you pull money out of your retirement accounts while you are still earning? The answer is it depends which account — and the difference between the accounts is the whole page. One of them gives you a genuine reprieve. The others do not.

The One Reprieve: The Plan at the Job You Still Hold

For the workplace plan — a 401(k), most commonly — sponsored by the employer you still work for, the law offers what is often called the still-working exception. If your plan allows it, you may delay the required withdrawals from that plan until you actually retire. Your first withdrawal from it is then due by April 1 of the year after the year you retire, and yearly after that. Notice the conditions, because each one matters: it covers only the current employer's plan, and the plan's own rules have the final say — most plans allow the delay, but check with your plan administrator rather than assuming.

There is one group the reprieve is not for: if you own more than 5% of the business you work for — more than 5% of its stock, or of its capital or profits if it is not a corporation — the exception does not apply to you. A 5% owner starts withdrawals from the company plan on the normal schedule, working or not. The thinking is plain enough: the exception exists for employees, not for owners who could otherwise set their own retirement date forever.

No Reprieve Anywhere Else: Your IRAs

Here is the part that catches working seniors most often, so it gets its own section. The still-working exception does not apply to IRAs at all. A traditional IRA begins its required withdrawals on the standard schedule — at age 73, or at age 75 if you were born in 1960 or later — whether you are working full time, part time, or not at all. Your paycheck is irrelevant to the IRA clock. (If the mechanics of those withdrawals are the homework in front of you, the full walk-through is here: what is a required minimum distribution (RMD)?)

Two members of the IRA family deserve naming because their names mislead people. A SEP IRA and a SIMPLE IRA sound like workplace plans — your employer, perhaps your own small business, set them up. For withdrawal rules they are IRAs, full stop: no still-working exception, even while the business is still contributing to them, and even if the employer in question is you. The sole proprietor still running her business at 74 owes withdrawals from her SEP IRA on schedule. And a 401(k) left behind at an employer you no longer work for gets no reprieve either — the exception belongs to the plan of the job you still hold, so each old employer's plan starts on the age schedule, separately, regardless of your current paycheck.

The Year You Retire: Both Clocks Run at Once

When retirement finally comes, plan for the shape of that first year, because it surprises people. The workplace plan's delayed withdrawals begin — with the April 1 option on the very first one, and the familiar caution that using it stacks two of the plan's withdrawals into a single tax year — while your IRA withdrawals, which never paused, continue on their own schedule. For many people the first full retirement year is one of the highest-income years of their retirement, and the tax bracket math of that year is worth doing in advance, on paper, rather than discovering it in April.

One door opens earlier than any of this, at 70½, even while you are still working: from an IRA, you may send money directly to a qualified charity as a qualified charitable distribution, or QCD — it never lands as your income, and once your own IRA withdrawals have begun, a QCD counts toward them, dollar for dollar, even in a year when you are still drawing a salary. For money you were going to give anyway, it is simply the cheapest way to give it. The step-by-step is here: how do I donate my required minimum distribution to charity?

Why This Foundation

If the charity door is the door you choose — while you are working or after — here is this Foundation's answer, in one paragraph. The Cardio Renal Foundation exists for the people living with kidney and heart disease, and its conviction is plain: dialysis should not be a life sentence. The gifts that arrive here keep a library of plain-words health articles and a shelf of free everyday tools — grocery lists, calendars, recipe boxes — free for the seniors who rely on them, and they carry forward the work of finding a way beyond dialysis. A QCD has one more virtue worth naming: because no tax is taken out of it on its way, the full amount you send is the amount that arrives — every dollar of it goes straight to work.

Stated Plainly

Stated plainly, because a money page owes you the same honesty as any other kind: this page explains how the rules work in general. It is not advice about your return. Your own picture — other income, a workplace plan, state taxes, a spouse's separate accounts — can change the details, and a qualified tax advisor who knows your situation is the right referee for your own numbers. And what can be checked, check: our legal name is Cardio Renal Foundation Inc, our EIN is 33-4359765, and we are a qualified 501(c)(3) tax-exempt organization — verifiable in the IRS records by anyone, in about three minutes, and we would rather you checked than took our word.

Still working at an age when most people have stopped is an achievement; the rules just ask to be sorted account by account. Questions reach a person here, at donations@cardiorenalfoundation.org or (646) 770-3946.

This article is informational only and is not tax, legal, or financial advice. Charitable giving and tax rules change and depend on your individual circumstances; consult a qualified tax advisor or attorney about your own situation.