Working Past 73 Shields the 401(k), Not the Rollover IRA
A little-known IRS carveout lets workers past 73 delay 401(k) withdrawals — but only at the employer they still work for. Money rolled into an IRA stays on the clock.
The IRS lets employees who are still working past the required minimum distribution age of 73 postpone RMDs from their current employer's 401(k), but that exception does not extend to IRAs holding money rolled over from a previous employer's plan.
Most retirement savers learn one rule and stop there: at age 73, the IRS wants its money, and required minimum distributions begin. What far fewer learn is that the rule has a door in it. If you are still employed at 73 and still participating in your current employer's 401(k), the tax code allows you to postpone distributions from that plan until you actually retire.
The catch is that the door is narrow. It protects the plan you are actively working under — and nothing else. The IRA sitting on the sidelines holding the balance you rolled over from your last job gets no such treatment. That account is fully subject to mandatory withdrawals the year you turn 73, regardless of how many hours a week you are still clocking in.
What the still-working exception actually covers
The exception applies to the qualified employer plan of the employer you currently work for. If you have a 401(k) at the company writing your paychecks, and you have not separated from service, distributions from that specific plan can be deferred until the year you retire. The logic is straightforward: the account is still an active workplace savings vehicle, not a drawdown vehicle.
Two conditions sit on top of that. First, the plan document itself has to allow the delay. The still-working exception is permissive, not mandatory — a plan sponsor may write its document so that distributions begin at the standard age anyway, and if it does, the plan's terms control. Second, the exception is unavailable to anyone who is a 5% owner of the business. Owners hit the required beginning date on the normal schedule whether they are working or not, which makes the carveout largely an employee benefit rather than a small-business-owner benefit.
Neither of those conditions is obvious from the outside. The only reliable way to know whether you qualify is to ask the plan administrator for the summary plan description and read what it says about required minimum distributions — not to assume the federal default applies.
Why the rollover IRA is the account that trips people up
Here is where the planning failure usually happens. A worker changes jobs in their sixties, does the tidy thing, and rolls the old 401(k) into an IRA to consolidate and get better investment options. Years later, still working, they assume the still-working exception covers their retirement money generally. It does not. As 24/7 Wall St notes, the exception protects the current employer's plan while leaving the rolled-over IRA fully exposed.
Traditional IRAs have no still-working exception at all. Neither do 401(k) balances left behind at former employers, since you have separated from service there. So the very act of consolidating — normally good hygiene — can be the act that locks in a taxable distribution stream you did not want at 73.
The consequence is not just the tax on the withdrawal itself. Forced income in a year when you are also drawing a salary stacks on top of wages, which can push a filer into a higher bracket, affect the taxation of Social Security if it has started, and feed into income-tested Medicare premium surcharges. A distribution you did not need for living expenses can therefore cost more than its face amount in marginal tax terms.
The rollback strategy, and when it is available
There is a maneuver that can restore the exception's protection: moving money the other direction. Many employer plans accept incoming rollovers from IRAs. If your current employer's 401(k) does, and you move a traditional IRA balance into it before the year RMDs would begin, that money becomes part of the current plan — and, if the plan permits the still-working delay and you are not a 5% owner, it goes on the same deferral clock as the rest of your 401(k).
The practical constraints matter. Not every plan accepts roll-ins. Plans that do may restrict what they take, and after-tax or nondeductible IRA basis can complicate the transfer. Institutional 401(k) menus are typically narrower than an IRA's, so consolidating into the plan trades flexibility for tax timing. And the move has to be completed on the right side of the calendar — once a distribution year has started, RMD amounts attributable to that year generally cannot be rolled over.
The market variable nobody controls
RMD amounts are not a policy choice; they are a function of the prior year-end account balance divided by a life expectancy factor. That means the size of the distribution you are forced to take is set by where markets closed on December 31, not by what you need. After a strong year, the required withdrawal is larger — and it is larger precisely when selling is least appealing to a saver who does not need the cash.
Balances have had plenty to work with. The S&P 500 tracker (NYSEARCA: SPY) finished at $761.69, down 0.12% on the day, in the most recent session ending Fri, 18 Sep 2026. The Nasdaq 100 fund (NASDAQ: QQQ) closed at $721.45, up 0.63%, while the Dow tracker (NYSEARCA: DIA) ended at $515.88, down 0.48%. None of that is a forecast for December balances, but it is a reminder that the denominator in the RMD formula is the only part you can plan around.
What to check before the year you turn 73
- Whether your current employer's plan document permits the still-working delay — in writing, from the administrator.
- Whether you are a 5% owner of the sponsoring business, which disqualifies you regardless.
- Whether any old-employer 401(k) balances are still sitting at former jobs, where no exception applies.
- Whether the current plan accepts incoming IRA rollovers, and what it will and will not take.
- How forced income would interact with your wages, Social Security timing, and Medicare premium tiers.
The rule is worth knowing precisely because it rewards a decision made years in advance. Once the required beginning date arrives, the account structure you have is the account structure you keep.
Key facts
- RMD age: 73
- Exception applies to: Current employer's 401(k), if the plan permits it
- Not covered: Traditional IRAs, including rollovers from prior employers
- S&P 500 tracker (SPY): $761.69, -0.12%, close of Fri, 18 Sep 2026
Frequently asked questions
What is the still-working exception to RMDs?
It is an IRS provision that lets an employee who is still working past the required minimum distribution age of 73 postpone distributions from the qualified retirement plan of the employer they currently work for. Distributions can be deferred until actual retirement, rather than beginning in the year the worker turns 73.
Does the exception cover my IRA?
No. Traditional IRAs have no still-working exception, including IRAs that hold money rolled over from a previous employer's 401(k). Those accounts are subject to required minimum distributions starting at age 73 regardless of whether you are still employed and still contributing to a workplace plan.
Who is disqualified from using the exception?
Anyone who is a 5% owner of the business sponsoring the plan cannot use the still-working exception and must begin distributions on the normal schedule. In addition, the plan document itself must permit the delay — the exception is optional for plan sponsors, so a plan may require distributions to start at the standard age anyway.
What happens to a 401(k) left at a former employer?
It gets no protection. The still-working exception applies only to the plan of the employer you currently work for, because you have separated from service at the former employer. Balances parked at old jobs are subject to required minimum distributions at 73 just as an IRA would be.
Can I move IRA money into my current 401(k) to delay RMDs?
Potentially. If your current employer's plan accepts incoming rollovers from IRAs, moving the balance in before distributions would otherwise begin can place that money under the current plan and its deferral treatment. Not all plans accept roll-ins, investment menus are usually narrower, and timing relative to the distribution year matters.
How is the size of a required minimum distribution determined?
The amount is calculated from the account's balance as of the prior December 31, divided by a life expectancy factor. That means market performance through year-end drives the size of the mandatory withdrawal. A strong year produces a larger required distribution, which arrives whether or not the saver needs the cash.
