Working past 73 can let you delay some required minimum distributions. Here is exactly how the still-working exception works and its important limits.
How the still-working exception works
The still-working exception lets you postpone RMDs from your current employer's 401(k) or 403(b) as long as you remain employed there and do not own 5% or more of the company. Your plan must also permit the delay, which most do. Under this rule, your first RMD from that plan is not due until April 1 of the year after you retire. This can be valuable if you want to keep deferring taxes on those funds while you continue earning a paycheck, since the distribution would otherwise add to your taxable income.
Where the exception does not apply
The still-working exception is narrow. It does not apply to traditional IRAs, which always require RMDs starting at your RMD age regardless of employment. It also does not cover 401(k)s left behind at former employers; those are still subject to RMDs at age 73 or 75. And if you own 5% or more of the business, you cannot use the exception at all. Many workers roll old 401(k)s into their current plan, if allowed, to bring more savings under the still-working shelter, but weigh that decision carefully.
Plan how working income affects Medicare
Earning wages plus taking some distributions can raise your income and your Medicare premiums through IRMAA. Coordinating your paycheck, RMDs, and coverage takes planning. Call 1-800-MEDIGAP (dial 1-800-633-4427) to speak with a licensed agent about how working past 73 affects your Medicare costs and distribution timing.