Most retirement savers assume that turning 73 sets off an unavoidable clock on required withdrawals from every tax-deferred account they own. For workers who are still on a payroll at that age, one specific account can work differently, and the exception is narrow enough that misunderstanding it can lead to either an unnecessary withdrawal or, worse, a missed one that triggers a penalty.
The General Rule: Age 73 Starts the Clock
For most retirement accounts, the IRS requires withdrawals to begin by April 1 of the year following the year a person turns 73, and that deadline applies to traditional IRAs, SEP IRAs, and SIMPLE IRAs no matter whether the account owner is still working. An IRA owner cannot delay the requirement by staying employed; the rule is tied strictly to age for that category of account.
Once the required withdrawals begin, they continue annually, and missing one, or taking less than the calculated minimum, exposes the account owner to an excise tax on the shortfall. That structure is why most retirement guidance treats 73 as a hard deadline rather than a flexible target.
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The “Still Working” Exception for a Current Employer’s Plan
Defined contribution plans, including a 401(k), operate under a different rule when a plan participant is still employed by the sponsoring company past age 73. According to the IRS, the required beginning date for that account becomes April 1 of the year following the later of the year the worker turns 73 or the year they retire, provided the plan allows the delay. In practice, that means a worker who keeps working past 73 and stays enrolled in that employer’s plan can avoid taking any withdrawals from it until actual retirement, rather than being forced to start at 73 regardless of employment status.
The delay is not automatic under every plan. A plan document can require distributions to begin at 73 even for employees who are still working, so the exception ultimately depends on how the specific employer’s plan is written, not on the tax code alone.
How the Deferred Deadline Actually Works Once Retirement Arrives
Delaying withdrawals does not mean escaping them permanently. Once a worker who used the still-working exception finally retires, the required beginning date for that employer’s plan becomes April 1 of the year following the later of the year the worker turned 73 or the year of actual retirement. From that point forward, the plan calculates required withdrawals the same way any other defined contribution plan does, using the account balance and a distribution period from the IRS’s life-expectancy tables, and the same December 31 deadline applies to every year after the first one.
In effect, the exception shifts the start of the clock rather than stopping it altogether, which means a worker who retires at 78 after years of continued employment will still face a first required withdrawal tied to that later retirement date, just as someone retiring at 73 would face one tied to that earlier date instead.
Two Carve-Outs That Undo the Exception
The still-working exception does not apply universally. A worker who owns 5% or more of the business sponsoring the plan must begin required withdrawals by age 73 regardless of continued employment, closing off a path that might otherwise let a business owner indefinitely defer withdrawals from a company retirement plan. The exception also applies only to the plan of the employer where the worker is currently employed; a 401(k) left behind at a previous job is treated like any other defined contribution account and remains subject to the standard age-73 deadline.
An individual retirement account owned by the same worker gets no benefit from continued employment at all, since IRAs require withdrawals at 73 without exception for work status. A worker who holds both an old employer’s 401(k) and a current employer’s 401(k) at the same time may therefore face required withdrawals from the old account while the current employer’s account remains fully deferred, an outcome that surprises many people who assume all of their workplace accounts are treated identically once they reach the same age.
Why the Distinction Matters for Someone Working Past Traditional Retirement Age
A growing number of workers are staying employed well past the age most peers retire, whether by choice or necessity, and the still-working exception can meaningfully change the tax picture for that group. Someone who continues drawing a paycheck while also facing required withdrawals from an old employer’s plan or an IRA may end up stacking taxable income in a way that a delayed 401(k) withdrawal from a current employer would not.
The practical step is straightforward: confirm directly with the current employer’s plan administrator whether the plan document permits the delay, since that single detail determines whether continued employment actually postpones withdrawals or whether age 73 applies regardless.
This article was produced with the assistance of AI and reviewed by The Financial Wire editorial team.
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David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
