What Is the RMD for a 401(K) If You Still Work?

Retirement accounts like 401(k)s come with specific withdrawal rules. One of the most important is the required minimum distribution (RMD), which determines when you must begin taking money out. But if you’re still working when you reach RMD age, the rules can be different. Whether or not you have to take an RMD from your 401(k) often depends on your employment status and where your retirement savings are held.

A financial advisor can provide additional insights into retirement plans and the strategies that best fit your long-term goals.

How RMD Rules Work for a 401(k)

RMDs are mandatory withdrawals that retirement account owners must take from their tax-advantaged retirement accounts, including 401(k)s. These distributions typically begin when you reach age 73 (as of 2023). However, this age is subject to change due to legislative updates. The IRS requires these withdrawals to ensure retirement funds don’t remain tax-deferred indefinitely.

To calculate your RMD amount, divide your 401(k) account balance as of December 31 of the previous year by a life expectancy factor provided by the IRS. These factors, found in IRS Publication 590-B, decrease as you age. This results in larger required withdrawals over time. Each 401(k) plan requires its own separate RMD calculation.

For most 401(k) owners, the first RMD occurs April 1 of the year following the year you turn 73. Subsequent RMDs must be taken by December 31 of each year. Be careful with your first distribution. Delaying it until April means you’ll need to take two distributions in the same tax year. This could potentially push you into a higher tax bracket.

You can use SmartAsset’s RMD Calculator to estimate how much you’ll need to withdraw from your retirement accounts once you reach RMD age.

Required Minimum Distribution (RMD) Calculator

Estimate your next RMD using your age, balance and expected returns.

Quickly estimate your RMDs and when to take them

RMD Amount for IRA(s)

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RMD Amount for 401(k) #1

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RMD Amount for 401(k) #2

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About This Calculator

This calculator estimates RMDs by dividing the user's prior year's Dec. 31 account balance by the IRS Distribution Period based on their age. Users can enter their birth year, prior-year balances and an expected annual return to estimate the timing and amount of future RMDs.

For IRAs (excluding Roth IRAs), users may combine balances and take the total RMD from one or more accounts. For 401(k)s and similar workplace plans*, RMDs must be calculated and taken separately from each account, so balances should be entered individually.

^*The IRS allows those with multiple 403(b) accounts to aggregate their balances and split their RMDs across these accounts.

Assumptions

This calculator assumes users have an RMD age of either 73 or 75. Users born between 1951 and 1959 are required to take their first RMD by April 1 of the year following their 73rd birthday. Users born in 1960 and later must take their first RMD by April 1 of the year following their 75th birthday.

This calculator uses the IRS Uniform Lifetime Table to estimate RMDs. This table generally applies to account owners age 73 or older whose spouse is either less than 10 years younger or not their sole primary beneficiary.

However, if a user's spouse is more than 10 years younger and is their sole primary beneficiary, the IRS Joint and Last Survivor Expectancy Table must be used instead. Likewise, if the user is the beneficiary of an inherited IRA or retirement account, RMDs must be calculated using the IRS Single Life Expectancy Table. In these cases, users will need to calculate their RMD manually or consult a finance professional.

For users already required to take an RMD for the current year, the calculator uses their account balance as of December 31 of the previous year to compute the RMD. For users who haven't yet reached RMD age, the calculator applies their expected annual rate of return to that same prior-year-end balance to project future balances, which are then used to estimate RMDs.

This RMD calculator uses the IRS Uniform Lifetime Table, but certain users may need to use a different IRS table depending on their beneficiary designation or marital status. It's the user's responsibility to confirm which table applies to their situation, and tables may be subject to change.

Actual results may vary based on individual circumstances, future account performance and changes in tax laws or IRS regulations. Estimates provided by this calculator do not guarantee future distribution amounts or account balances. Past performance is not indicative of future results.

SmartAsset.com does not provide legal, tax, accounting or financial advice (except for referring users to third-party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States). Articles, opinions and tools are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual. Users should consult their accountant, tax advisor or legal professional to address their particular situation.

RMD Rules for Multiple 401(k)s and IRAs

If you’ve worked for more than one employer, it’s common to have multiple 401(k) accounts. Each of these accounts is subject to its own RMD rules, which can complicate your withdrawal schedule. Unlike IRAs, you can’t combine RMDs across 401(k) plans. Each employer plan must have its own separate RMD calculated and withdrawn individually.

For example, if you have a 401(k) from a previous employer and one with your current employer, you’ll need to take RMDs from the old plan once you reach age 73, even if you’re still working. However, if you qualify for the still-working exception with your current employer, you can delay withdrawals from that specific plan until you retire.

This distinction makes it especially important to track your accounts and understand where each plan stands. Consolidating old 401(k)s into an IRA can sometimes simplify your RMD strategy, but doing so also changes the tax and timing rules. Since IRAs don’t qualify for the still-working exception, rollovers should be carefully considered before you act.

Does Working Impact When You Must Take RMDs?

When you reach age 73 it triggers RMDs from your retirement accounts. However, if you’re still punching the clock at your current employer, you might qualify for what’s known as the “still-working exception” for your 401(k) plan at that company.

This provision allows you to delay taking RMDs from your current employer’s 401(k) until April 1 of the year following your retirement, regardless of your age. This can be particularly valuable if you’re in a higher tax bracket while working and expect to drop to a lower bracket after retirement.

The still-working exception only applies to your current employer’s 401(k) plan. Any 401(k) accounts from previous employers or traditional IRAs are still subject to RMDs beginning at age 73, even if you’re actively employed elsewhere. Additionally, if you own more than 5% of the company where you work, you cannot use this exception.

How to Create a 401(k) Withdrawal Strategy

Before making any withdrawals from your 401(k), take time to evaluate your financial situation. Consider your monthly expenses, other income sources, and how long your retirement savings need to last. This assessment forms the foundation of your withdrawal strategy and helps determine how much you’ll need to withdraw regularly.

The IRS taxes 401(k) withdrawals as ordinary income, which can significantly impact your tax bracket. Consider spreading withdrawals across tax years or combining them with years when you have higher deductions. Some retirees find it beneficial to work with a tax professional to create a 401(k) withdrawal strategy that minimizes their overall tax burden.

Many financial experts recommend withdrawing from taxable accounts first, then tax-deferred accounts like traditional 401(k)s, and finally tax-free accounts like Roth IRAs. This sequence can help maximize tax efficiency and potentially extend the life of your retirement savings.

Coordinate your 401(k) withdrawals with other income sources such as Social Security, pensions, or part-time work. This comprehensive approach ensures you’re not withdrawing more than necessary and potentially preserves your retirement savings for longer.

Finally, your withdrawal strategy shouldn’t be static. Review it annually or whenever significant life changes occur. Adjustments may be necessary based on changes in your health, lifestyle, market conditions, or tax laws. Regular reviews help ensure your strategy remains aligned with your retirement goals and financial circumstances.

Bottom Line

If you’re still working past age 73, understanding what the RMD for a 401(k) is if you still work becomes crucial for retirement planning. The good news is that many employees can benefit from the “still working” exception, which allows you to delay required minimum distributions from your current employer’s 401(k) plan until you retire. This exception applies only to your current employer’s plan—any 401(k)s from previous employers or traditional IRAs will still require distributions.

Tips for Retirement Planning

A financial advisor can help you put together a long-term financial plan and help you align your finances with your retirement goals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Consider utilizing a retirement calculator to help you estimate how much money you might need for the retirement you’re wanting to live in the future.