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I’m 77 and still working. Is it true that I don’t need to take RMDs?

Financial advisor and columnist Brandon Renfro

I am 77 years old and I asked my 401(k) fund manager to set up my RMD. I was told that I don’t have to withdraw my money if I am still employed. Please confirm if this is in fact an IRS rule or that of the fund management company?

-Bea

That’s right, Bea. If you are still employed, you do not need to take a required minimum distribution (RMD) from your current 401(k), regardless of your age, as long as your employer does not require it. That is actually a rule of the Tax Authorities.

RMD requirements depend on your age, account type, and whether you are still employed. There have been some changes to these rules recently, so let’s take a look at the minimum distribution requirements. (And if you need help planning for retirement, including RMDs, consider talking to a financial advisor.)

What are RMDs and when are they required?

A married couple calculates their RMDs together on a laptop computer. A married couple calculates their RMDs together on a laptop computer.

A married couple calculates their RMDs together on a laptop computer.

The IRS does not allow you to leave your retirement savings in tax-deferred accounts indefinitely. Instead, the government requires you to withdraw a certain amount from your accounts each year. The amount you need to withdraw is based on your age and how much money was in your account at the end of last year.

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Before the SECURE Act of 2019, RMDs began at age 70 ½. However, the law increased the RMD age to 72 years.

However, that increase was short-lived. The SECURE Act 2.0 raised the RMD age to 73 starting in 2023 and set it to increase to 75 in 2033.

You are required to take an RMD from most tax-advantaged retirement accounts, with the exception of Roth IRAs.

Under prior law, designated Roth accounts within employer-sponsored plans such as Roth 401(k)s and Roth 403(b)s were still subject to RMD rules. However, the SECURE Act 2.0 addressed this shortcoming, and beginning in 2024, no Roth accounts will be subject to age-based RMDs. I specify “age-based” here to recognize that inherited Roth accounts are still subject to the 10-year rule. (And if you have other retirement-related questions, this tool can help you find potential financial advisors.)

Are you still busy?

Retired woman calculating her RMDRetired woman calculates her RMD

Retired woman calculates her RMD

Here is the exception that applies to you. If you are still employed, you do not need to take RMDs from the plan your current employer sponsors.

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But even if you’re still working, you’ll still need to carry RMDs from:

So if you have a 401(k) from a former employer, be sure to take RMDs out of that account. A good solution to avoid RMDs on an old account is to simply transfer those funds to your current plan if allowed. (And if you need help planning your RMDs, consider working with a financial advisor.)

In short

Because you are still employed, you do not need to take an RMD from your current employer’s retirement plan. RMDs also do not apply to Roth accounts. However, you will still need to take an RMD if you still have a retirement account from a former employer.

Tips for finding a financial advisor

  • Finding a financial advisor does not have to be difficult. SmartAsset’s free tool matches you with up to three vetted financial advisors serving your area, and you can have free introductory calls with your advisors to decide which one you think is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

  • Consider a few advisors before choosing one. It’s important to make sure you find someone you trust to manage your money. As you consider your options, these are the questions you should ask an advisor to ensure you make the right choice.

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Brandon Renfro, CFP®, is a financial planning columnist at SmartAsset, answering reader questions about personal finance and tax topics. Do you have a question that you would like answered? Email AskAnAdvisor@smartasset.com and your question may be answered in a future column.

Please note that Brandon is not a participant in the SmartAdvisor Match platform and has received compensation for this article.

Photo credit: ©iStock.com/LumiNola, ©iStock.com/FG Trade

The message Ask an advisor: I’m 77 and still working. Is it true that I don’t need to take RMDs? first appeared on SmartReads by SmartAsset.

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