RMD at 73 while still working

– Under the new Secure Act rules, does a person have to take an RMD when they turn 73 while they are still employed and funding their SEP, 401k, 403b, etc.?

– If the above is correct then they can hold off until age 75, is it older while still working?

– But if they stop working at any time after 73, they have to start taking their RMD’s in the same year of retirement or the next year after they retire?

Thank you,
Douglas



  • Whether they are still contributing or not is not a factor. The “still working” exception applies to those employees who are not >5% owners who are still employed at the end of each year which would otherwise be an RMD year. The Secure Acts do not affect these rules. The exception continues to apply with no age deadline.
  • Once they retire after using the still working exception, the retirement year becomes the first RMD distribution year with the RBD being 4/1 of the following year. If they retire and trigger RMDs, those RMDs must continue even if they return to work for the employer.
  • The exception only applies to the non IRA plan of the employer, not to any other plans. However, if the qualified plan accepts rollovers from other plans, the still working exception applies to the entire balance in the current plan. This is a way to postpone IRA RMDs if desired. 

Does the 5% or more ownership for exemption apply to (individual company, LLC, partnership, trust?) on the RMD at 73 and after and still working?

The >5% ownership is determined one time, in the year the participant would otherwise have to begin RMDs if no longer working. Family attribution rules apply, so for example if the participant worked for a company partially owned by his son, the son’s ownership % would have to be added to the participant’s. If greater than 5%, the still working exception does not apply. Any changes in ownership after that determining year are ignored.

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