More retirees are working past 73 than they used to. A recent analysis found that 35% of workers have pushed retirement later, and for many of them, a required withdrawal from a retirement account arrives while they're still collecting a paycheck.
Here's the part that trips people up. A 401(k) with your current employer can often wait until you actually retire. A traditional IRA cannot. Confirm which rule applies to each account you own before you skip a withdrawal you actually owe.
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Pick the situation that matches your job status this year.
What the Still-Working Exception Actually Requires
The IRS lets you delay required withdrawals from your current employer's 401(k) as long as you're still working there when the deadline hits. This is the still-working exception, and most workplace plans offer it, though a plan isn't required to.
Two conditions have to hold. You can't own 5% or more of the company sponsoring the plan, and the plan document itself has to allow the delay. Ask your plan administrator or check your Summary Plan Description instead of assuming the rule applies to you.
For the general turning-73 deadline and penalty math, see Required Minimum Distribution: Your Turning-73 Checklist.
Why Your IRA Doesn't Get the Same Pass
A traditional IRA has no employer attached to it, so there's no employment status for the IRS to check. Your first IRA withdrawal is due by April 1 of the year after you turn 73, and every year after that by December 31, whether you're working, retired, or somewhere in between.
This catches people who assume one exception covers every account they own. It doesn't. Missing the deadline brings a 25% IRS penalty on the amount you should have withdrawn, cut to 10% if you correct it quickly, the same penalty that applies at any age.
Keep legal questions focused on deadlines and next steps.
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Checklist
Confirm the exception applies to you
Do this before you decide to skip this year's withdrawal.
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Timeline
Confirm your IRA number this year
Work through this before December 31.
Pull your traditional IRA's balance as of December 31 last year from your most recent statement.
Ask your IRA custodian for the required figure, or use the IRS Uniform Lifetime Table with your balance and age.
Confirm the distribution actually posts before the deadline. A request alone doesn't count if it hasn't gone through yet.
Checklist
Sort your accounts into two piles
One pile follows your current job status. The other doesn't.
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Checklist
Map the first post-retirement withdrawal now
Do this before you set a retirement date, not after.
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Save what you confirmed here so nothing slips past a deadline.
Old 401(k)s and Multiple Accounts Don't Get the Same Break
The still-working exception only covers the 401(k) held by the employer you work for right now. A 401(k) from a job you left five years ago doesn't qualify, even though you're still employed somewhere else. That account stays on the regular schedule.
Traditional IRAs work differently in one useful way. You can add up the required amount across every IRA you own and withdraw the total from just one of them. 401(k)s don't allow that. Each workplace plan's required withdrawal has to come out of that specific plan.
When You Do Retire, the Clock Starts
The still-working exception ends the moment you stop working for that employer, even mid-year. Your first 401(k) withdrawal from that plan is then due by April 1 of the year after you retire, the same grace period new retirees get at 73.
If you're planning your retirement date around taxes, that first post-retirement withdrawal is worth mapping ahead of time. Combined with Social Security or a pension, it can push more of your income into a higher tax bracket than you expected. See The IRMAA Surprise Hiding in Your Retirement Withdrawals for how a large withdrawal year can raise your Medicare premium too.
