The “Still Working Exception”

What is the still working exception?

If you have a qualified employer retirement plan, you generally need to start taking your required minimum distributions (RMDs) no later than April 1st of the year following the year you turn 70½. This is your required beginning date or RBD. Certain employer retirement plans, however, may have a “still working exception” for their employees who reach 70½ but are still actively working for that employer.

To illustrate how this works, assume you have a 401(k) and the plan permits a still working exception, an option you have elected. Now assume you are 73 years old and you decide to retire in August this year. Your retirement immediately triggers your RBD as April 1, 2019 and your RMD requirement begins the instant you retire.

In this example, if you chose to delay your very first RMD and do not take it until, say, January 2019, you will still need to take your RMD for 2019 by December 31st next year. Yes, you will have to take two RMDs in 2019 under this scenario.

An employee who is over 70½ years old, still working for the company and doesn’t own more than 5% of the business, may elect to delay his/her RBD for taking RMDs until April 1st of the year following the year the employee retires.

It’s important to note that employer plans may offer this option, but they are not required to offer a “still working exception.”

IMPORTANT: There is no “still working exception” for IRAs, Simple IRAs or SEP IRAs.

Source: and Pub 560


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