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Ask a Fool: If I'm Over 70 and Still Working, Do I Need to Take an RMD?

By Matthew Frankel, CFP® - Sep 7, 2018 at 12:00PM

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The answer depends on the type of retirement account you have.

Q: I turned 70 1/2 this year, which means that I'm at the age at which I need to start taking required minimum distributions from retirement accounts. Does this apply if I'm still working?

Under most circumstances, required minimum distributions (RMDs) must be taken from tax-deferred retirement accounts -- such as traditional IRAs and 401(k)s -- once the account holder has reached 70 1/2 years of age. However, if you are still working, you may not have to. It depends on the type of account and whether you're still working for that employer.

There's no RMD exception for traditional IRAs, even if you're still working full time. Your first RMD must be taken by April 1 of the year following the year in which you reach age 70 1/2.

On the other hand, if your retirement funds are in an employer-sponsored plan such as a 401(k), 403(b), or 457 plan, the rules state that your first RMD doesn't need to be taken until April 1 of the year following the year you turn 70 1/2 or the year you retire from service from the plan's sponsoring employer.

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