From 24/7 Wall St. · David Beren · · 1m 30s
At 75 He Still Has a Paycheck and Skips RMDs
A 75-year-old worker can skip retirement distributions if they still earn a paycheck, but four hidden rules could trigger penalties.
In brief
A 75-year-old worker can skip retirement distributions if they still earn a paycheck, but four hidden rules could trigger penalties. Workers over 73 with a paycheck can delay RMDs from their current employer's 401(k) until retirement, but must meet four conditions to avoid IRS penalties. Originally reported by 24/7…
The Still-Working Exception
Federal law lets workers skip required minimum distributions from their current employer's 401(k) until retirement age if they still earn a paycheck.
Four Hidden Rules
Four conditions must be met to avoid IRS penalties: the plan must allow the exception, it covers only current employment, it doesn't apply to IRAs, and you can't be a 5% owner of the business.
IRAs Are Separate
Retirement accounts like IRAs are not covered by the exception; they follow the standard RMD schedule regardless of current employment status.
5% Owner Trap
Owners of family businesses often miss the 5% ownership threshold, which can trigger penalties if not checked through IRS attribution rules.
Rolling Money In
Moving pre-tax IRA balances into a current employer's 401(k) can delay RMDs on the combined balance while avoiding the pro-rata rule.
Medicare Impact
An unnecessary RMD distribution in 2026 could raise Medicare Part B and Part D premiums by up to $689.90 in 2028.
Retirement Definition
Full separation from work counts as retirement; part-time work or rehiring does not reset the clock for RMDs.
The key point
Workers over 73 with a paycheck can delay RMDs from their current employer's 401(k) until retirement, but must meet four conditions to avoid IRS penalties.
