I am 77 and Nonetheless Working. Is it True That I Do not Need to Take RMDs?

Financial advisor and columnist Brandon Renfro

Monetary advisor and columnist Brandon Renfro

I’m 77 years previous and I requested my 401(okay) fund administrator to arrange my RMD. I used to be instructed I don’t have to withdraw my cash if I’m nonetheless employed. Please affirm if this the truth is an IRS rule or that of the fund administration firm?


That’s right, Bea. In case you are nonetheless employed, you don’t have to take a required minimum distribution (RMD) out of your present 401(k) no matter your age, so long as your employer doesn’t require it. That’s the truth is an IRS rule.

RMD necessities rely in your age, the account kind and whether or not or not you might be nonetheless employed. There have been some adjustments to those guidelines not too long ago, so let’s assessment the minimal distribution necessities. (And if you happen to need assistance with retirement planning, together with RMDs, think about talking with a financial advisor.)

What Are RMDs and When Are They Mandated?

A married couple calculates their RMDs together on a laptop computer.

A married couple calculates their RMDs collectively on a laptop computer pc.

The IRS gained’t allow you to depart your retirement financial savings in tax-deferred accounts indefinitely. As a substitute, the federal government requires you to withdraw a sure sum of money out of your accounts every year. How a lot you’re mandated to withdraw is predicated in your age and the way a lot cash was in your account on the finish of the earlier 12 months.

Earlier than the SECURE Act of 2019, RMDs began at age 70 ½. Nonetheless, the regulation elevated the RMD age to 72.

That enhance was short-lived, although. The SECURE Act 2.0 raised the RMD age to 73 starting in 2023 and set it to extend to 75 in 2033.

You might be required to take an RMD from most tax-advantaged retirement accounts apart from Roth IRAs.

Beneath prior regulation, designated Roth accounts inside employer-sponsored plans like Roth 401(okay)s and Roth 403(b)s had been nonetheless topic to RMD guidelines. Nonetheless, the SECURE Act 2.0 addressed this shortcoming, and starting in 2024 no Roth accounts might be topic to age-based RMDs. I specify “age-based” right here to acknowledge the truth that inherited Roth accounts are nonetheless topic to the 10-year rule. (And when you have different retirement-related questions, this tool can help match you with potential financial advisors.)

Are You Nonetheless Working?

Retired woman calculating her RMD

Retired lady calculating her RMD

Right here lies the exception that applies to you. In case you are nonetheless employed you then don’t should take RMDs from the plan that your present employer sponsors.

Nonetheless, even in case you are nonetheless working then you need to nonetheless take RMDs from:

So, when you have a 401(okay) from a former employer, you’ll must just be sure you’re taking RMDs from that account. A superb workaround for avoiding RMDs for an previous account is to easily roll these funds over into your present plan in case you are allowed. (And if you happen to need assistance planning your RMDs, consider working with a financial advisor.)

Backside Line

Since you might be nonetheless employed, you aren’t required to take an RMD out of your present employer’s retirement plan. RMDs additionally don’t apply to Roth accounts. Nonetheless, you continue to must take an RMD if you happen to nonetheless have a retirement account from a former employer.

Ideas for Discovering a Monetary Advisor

  • Discovering a monetary advisor does not should be onerous. SmartAsset’s free tool matches you with as much as three vetted monetary advisors who serve your space, and you’ll have free introductory calls together with your advisor matches to resolve which one you are feeling is best for you. In the event you’re prepared to seek out an advisor who may also help you obtain your monetary targets, get started now.

  • Take into account just a few advisors earlier than selecting one. It is necessary to ensure you discover somebody you belief to handle your cash. As you think about your choices, these are the questions you should ask an advisor to make sure you make the suitable alternative.

Brandon Renfro, CFP®, is a SmartAsset monetary planning columnist and solutions reader questions on private finance and tax subjects. Received a query you need answered? Electronic mail AskAnAdvisor@smartasset.com and your query could also be answered in a future column.

Please notice that Brandon shouldn’t be a participant within the SmartAdvisor Match platform, and he has been compensated for this text.

Picture credit score: ©iStock.com/LumiNola, ©iStock.com/FG Commerce

The put up Ask an Advisor: I’m 77 and Still Working. Is it True That I Don’t Have to Take RMDs? appeared first on SmartReads by SmartAsset.

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