By Sarah Brenner, JD
IRA Analyst


I have a question about avoiding RMDs for a still-working 72 year old in a 401k plan.  Suppose they don’t have to take 401k RMDs due to the still-working exemption from RMDs.  Let’s say the person knows they will retire next year in February 2020 when they will be 73.  If they do an IRA rollover while still employed in January 2020, would that avoid the RMD for the 401k plan?

Is it correct to assume that the rollover amount from the 401k would not be included in the IRA RMD calculation for 2019, but would be included for 2020 (since 401k amount was not in IRA at end-2018, it would not be included in calculation)?


This is an interesting question. We do get many questions about the interplay between the still-working exception and IRA rules. It’s a complicated area.

You are right that you can delay RMDs from a 401(k) with the still-working exception. However, that ability ends in the year of retirement. So, if you retire in February of 2020, you will have an RMD for 2020. The RMD rules further say that the first money out of your plan is your RMD for 2020. That would mean that the distribution in January would include the RMD and that RMD would not be eligible for rollover. This is true even though you may still be working at the time it is taken. The remainder of the funds in the 401(k) are eligible for rollover to an IRA and would be included in the December 31, 2020 balance which would be used to calculate the 2021 IRA RMD.


I will be turning 70 on April 29 therefore will be 70 ½ on October 29.

I am still working full time. So, to avoid bumping into a higher tax bracket, I don’t want to start taking RMD when I am 70. Instead, I plan to take the RMD in the last quarter of the year Oct-Dec.

So, if I am only taking three months worth, how do I calculate the correct RMD amount? Do I take my balance of retirement accounts from Dec 31, get the RMD amount for the entire year and then divide by four?

Thank you,



Hi Peter,

Calculating RMDs can be tricky and this is especially true in the first year they are required. If your 70th birthday is April 29, 2019 you will be 70 ½ in 2019. This means you must take your first RMD for 2019. Unfortunately, there is no prorating of RMDs based on when you reach age 70 ½. The total amount that is calculated for your 2019 RMD must be taken. However, there is good news if you are looking to put off taking your 2019 RMD. You can delay taking your first RMD until April 1 of the year after the year you reach age 70 1/2. This means that you don’t have to take your first RMD in 2019 if you do not want to take it. You can delay it until April 1, 2020.

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