I’m 77 and Still Working. Is it True That I Don’t Have 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 organize my RMD. I used to be instructed I don’t have to withdraw my cash if I’m nonetheless employed. Please verify if this in actual fact an IRS rule or that of the fund administration firm?


That’s right, Bea. If you’re nonetheless employed, you don’t have to take a required minimal distribution (RMD) out of your present 401(okay) no matter your age, so long as your employer doesn’t require it. That’s in actual fact an IRS rule.

RMD necessities rely in your age, the account sort and whether or not or not you’re nonetheless employed. There have been some adjustments to those guidelines just lately, so let’s evaluate the minimal distribution necessities. (And when you need assistance with retirement planning, together with RMDs, think about talking with a monetary 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 received’t allow you to depart your retirement financial savings in tax-deferred accounts indefinitely. As an alternative, 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 legislation elevated the RMD age to 72.

That improve 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 except for Roth IRAs.

Underneath prior legislation, 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 will probably 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 if in case you have different retirement-related questions, this device may also help match you with potential monetary advisors.)

Are You Nonetheless Working?

Retired woman calculating her RMD

Retired girl calculating her RMD

Right here lies the exception that applies to you. If you’re nonetheless employed then you definitely don’t must take RMDs from the plan that your present employer sponsors.

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

So, if in case you have a 401(okay) from a former employer, you’ll have to just be sure you’re taking RMDs from that account. A very good 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 when you need assistance planning your RMDs, think about working with a monetary advisor.)

Backside Line

Since you’re 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 have to take an RMD when you nonetheless have a retirement account from a former employer.

Suggestions for Discovering a Monetary Advisor

  • Discovering a monetary advisor does not must be exhausting. SmartAsset’s free device matches you with as much as three vetted monetary advisors who serve your space, and you may have free introductory calls along with your advisor matches to determine which one you are feeling is best for you. In case you’re prepared to search out an advisor who may also help you obtain your monetary targets, get began now.

  • Contemplate a number of advisors earlier than deciding on one. It is essential to be sure to discover somebody you belief to handle your cash. As you think about your choices, these are the questions you need to ask an advisor to make sure you make the proper selection.

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

Please word that Brandon just isn’t 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 Nonetheless Working. Is it True That I Don’t Should Take RMDs? appeared first on SmartReads by SmartAsset.

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