Understanding RMD Rules for Those Still Working at Age 74
A common question arises for individuals age 74 who are still working: Do they need to take Required Minimum Distributions (RMDs) from their 401(k) plan?
The answer is no, as long as they are still employed by the company that sponsors the plan.
However, the rules change if the individual retires or changes jobs. Here’s what you need to know:
If they retire or change jobs:
They must start taking their RMDs in the year they retire. There is no option to defer this to the following year.If they are a 5% or more owner of the company:
They are required to take RMDs even if they continue working past age 74.
Understanding these rules can help plan for retirement more effectively and avoid potential penalties. If you have any questions or need personalized advice, feel free to reach out!