The still-working exception is a rule that may allow a participant in an employer-sponsored retirement plan to delay required minimum distributions (RMDs) beyond the participant’s applicable RMD age.
If the plan permits the still-working exception, the participant’s required beginning date (RBD) is April 1 of the calendar year following the later of:
- The calendar year in which the participant reaches the applicable RMD age; or
- The calendar year in which the participant retires from employment with the employer maintaining the plan.
The exception applies only to the retirement plan maintained by the employer for whom the participant is still working. Continuing to work does not allow the participant to delay RMDs from IRAs or from retirement plans maintained by former employers.
The still-working exception is not available to a participant who is a 5% owner, meaning an individual who owns more than 5% of the employer maintaining the plan.
Example:
Maria reaches age 73 in 2026 but continues working for ABC Company, which maintains her 401(k) plan. ABC’s plan permits the still-working exception, and Maria is not a 5% owner.
Maria does not have to begin taking RMDs from the ABC 401(k) merely because she reaches age 73. If she retires from ABC in 2028, her required beginning date for that plan is April 1, 2029. However, her RMD for 2028, the year she retires, must still be taken. Waiting until April 1, 2029 to take that first RMD does not make it a 2029 RMD.
The still-working exception would not allow Maria to postpone RMDs from any traditional IRAs she owns.