Broker Check

RMDs While Still Working

January 19, 2022

RMDs are back for 2021.  RMDs apply to all retirement accounts including IRAs, SEP IRAs, SIMPLE IRAs, and 401k/ 403b/457 type plans.  Certain retirement plans, such as IRAs, may be eligible for aggregation rules where the individual may be able to calculate the total RMD from all IRAs (if they maintain multiple IRAs) but distribute from only one account so that there are fewer transactions and tax forms for the year.

Individuals who are age 72 but still working may be able to defer their RMDs from their employer sponsored plans if they meet certain requirements.  However, though they are still working, they must satisfy their RMD from other retirement accounts held outside of their employers 401k plan, such as IRAs.

Working past 72 while maintaining multiple retirement accounts can add a layer of complexity to one’s tax planning so it is important to review all accounts and make sure that RMDs are satisfied. Another option may be to consolidate retirement accounts in order to reduce the RMD amount or at least simplify the administrative process of taking the RMDs each year.

As always, be sure to consult a competent tax advisor before engaging in tax planning to manage your RMDs.