The three conditions, all required

  1. Still employed by the plan sponsor. Retire, and the exception ends. Your required beginning date becomes April 1 of the year after the year you retire.
  2. You own 5% or less of the company. Own more than 5% and the exception is unavailable, full stop. RMDs start on the normal schedule even if you are still running the company full-time.
  3. The plan allows it. The exception is optional for the plan sponsor. Some plans require RMDs at the normal starting age for everyone, including active employees. Check the plan document or ask HR; do not assume.
Two things people get wrong. First, IRAs are never covered: your traditional, SEP, and SIMPLE IRAs owe RMDs on the normal schedule even if you work until 90. Second, old employers' plans are not covered: the 401(k) at the company you left years ago owes RMDs at 73, working or not. Only the plan of your current employer qualifies.

Worked example: the math, account by account

The following is a hypothetical illustration with round numbers, showing how one person can have three different RMD answers at the same age. It is not your situation and not advice; your factors come from the IRS Uniform Lifetime Table based on your age.

Illustration. You are 74, working full-time for your current employer. You own 0% of the company, and the plan document confirms the exception is allowed. Your accounts on December 31 of last year:

  • Current employer's 401(k): $600,000. Delayed. All three conditions hold, so no RMD is due from this plan while you keep working there.
  • Former employer's 401(k): $250,000. RMD due. The exception does not cover old employers' plans. Your Uniform Lifetime Table factor at 74 is 25.5, so the RMD is $250,000 ÷ 25.5 = $9,803.92, and it must come out of this plan.
  • Traditional IRA: $300,000. RMD due. IRAs are never covered by the exception. The RMD is $300,000 ÷ 25.5 = $11,764.71. If you held additional IRAs, their RMDs could be aggregated and taken from any of your IRAs, but that flexibility does not extend to the 401(k).
Total owed this year: $21,568.63, despite the $600,000 current-employer balance being sheltered. This is the number people miss: they see the one delayed account and assume everything waits.

Planning notes

  • The retirement year. In the year you retire, RMDs begin on the delayed plan. Your required beginning date is April 1 of the following year. Using the April 1 extension means two distributions in one calendar year, which can bump you into a higher bracket.
  • The rollover question. Rolling an old 401(k) into your current employer's plan can bring those dollars under the exception's umbrella, but only if the plan accepts rollovers. Compare investment options, fees, and creditor protection before moving money for this reason alone.
  • 403(b) plans generally allow the exception; governmental 457(b) plans have their own distribution rules, so confirm with the plan administrator.
  • Recheck every year. Your employment status, ownership percentage, and plan terms can change. A promotion into an ownership stake or a plan amendment can end the exception silently.

Model my accounts under the exception

For the full treatment, including the IRA and old-plan exclusions, see the in-depth guide: The Still-Working Exception: Delaying RMDs Past 73.

Sources

Frequently asked questions

Can I delay RMDs if I am still working at 73?

From your current employer's qualified plan, yes, if you are still employed, own 5% or less of the company, and the plan allows it. IRAs and former employers' plans are never delayed.

Does the still-working exception apply to IRAs?

No. Traditional, SEP, and SIMPLE IRAs owe RMDs on the normal schedule regardless of employment.

Does the still-working exception apply to a 401(k) from a previous employer?

No. Only the plan of your current employer qualifies; old plans owe RMDs at the normal starting age.

What happens to the still-working exception if I own more than 5% of the company?

The exception is unavailable. RMDs start on the normal schedule even while you keep working.

Can my employer refuse to allow the still-working exception?

Yes. The exception is optional for the plan sponsor, so confirm your plan document or ask HR.

When do RMDs start after I retire under the still-working exception?

Your required beginning date becomes April 1 of the year after the year you retire. Using that extension means two distributions in one calendar year.

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Disclaimer. Educational purposes only, not tax, legal, or financial advice. The still-working exception depends on your employment status, ownership percentage, and your specific plan's terms. Verify everything with your plan administrator and a qualified tax professional before acting. The authoritative sources are IRS Publication 590-B and the IRS RMD FAQs.