35% of Workers Have Pushed Retirement Later. At 73, His Current 401(k) May Delay RMDs Even While His IRA Cannot.

35% of Workers Have Pushed Retirement Later. At 73, His Current 401(k) May Delay RMDs Even While His IRA Cannot.

Gerelyn Terzo

Sat, September 19, 2026 at 3:02 AM GMT+3 6 min read

Quick Read

• 35% of U.S. workers have delayed retirement, but at 73, traditional IRA RMDs begin regardless of employment status, unlike current employer 401(k)s.

• IRA RMDs added to wages and Social Security can push combined income past $34,000, making up to 85% of benefits taxable for single filers.

• Rolling eligible IRA or old 401(k) balances into a current employer's plan may shield those funds from RMDs while the worker remains employed.

• Two retirees, same $1 million, same 4% rule, buy one finished with $1.4 million, the other hit $0 in 12 years. Our free reader guide explains the flaw that separated them, and the income-first method built to avoid it.

Retirement keeps moving further away for a sizable share of American workers. According to MyPerfectResume's 2026 Retirement Reality Gap Report, a national survey of 1,000 U.S. workers, 35% said they had pushed their expected retirement age later over the previous three years. Rising living costs were the biggest obstacle to retiring earlier, cited by 64%.

Picture one of them at 73. He is still clocking in because the paycheck helps, his current 401(k) keeps growing, and retirement can wait another year. Then a required minimum distribution (RMD) notice arrives from the custodian holding his traditional IRA. Why does money have to come out while he is still working? Because working longer can postpone RMDs from one retirement account without doing anything for another.

Working Longer Gives the Current 401(k) an Advantage

For someone in this age group, traditional IRA RMDs generally begin at 73 whether he is employed or not. A workplace retirement plan can follow a different clock. If the plan allows it, a worker generally can postpone RMDs from the 401(k) maintained by the employer he is still working for until after he retires. The exception does not apply if he owns more than 5% of the company.

The 4% Rule is Broken, Built On A World That No Longer Exists

Every retiree knows about the 4% rule, but it frames retirement as a slow liquidation and still causes retirees with seven-figure accounts to agonize over a dinner out.

There's a different way to run the math that makes more sense today. Build an income floor — dividends, interest, and Social Security that cover your essential bills every month — and you never have to sell shares into a down market just to pay them.

Our free reader guide, The 4% Rule Is Broken, walks through it in about 15 minutes. Access the report here.

That makes the 35% delaying retirement trend more than a labor-market statistic. For some older workers, another year on payroll can also mean another year before the current 401(k) has to start paying money out. The traditional IRA gets no such reprieve. Neither does a 401(k) sitting at an employer he left years ago. A 73-year-old can therefore have three retirement accounts that look nearly identical on a statement while only one gets to follow his employment date.

The IRA RMD Can Make More Social Security Taxable

By 73, delayed retirement credits have stopped. Waiting beyond 70 does not make a Social Security retirement benefit grow any larger because of claiming age. Most workers in this position are therefore collecting Social Security while wages are still arriving. Now add an IRA RMD. Federal taxation of Social Security depends partly on combined income: adjusted gross income (AGI), tax-exempt interest and half of Social Security benefits. For a single filer, combined income above $34,000 can make up to 85% of benefits taxable. For married couples filing jointly, the upper threshold is $44,000.

Suppose he receives $28,800 a year from Social Security, earns a $60,000 salary and has a $22,000 IRA RMD. Before even counting other investment income, he is well beyond the range where up to 85% of his Social Security can become taxable. That does not mean Social Security is taxed at an 85% rate. It means as much as 85% of the benefit can be included in taxable income (we mapped this and eight other quiet drains on retirement balances in a free tax trap guide). The current 401(k), meanwhile, may still be sitting untouched because he remains employed.

One Rollover Can Change Which Account Faces RMDs

There may be another move available to someone planning to work past 73. If his current employer's 401(k) accepts incoming rollovers, he may be able to move eligible pretax IRA money or balances from former-employer plans into the current 401(k). Once there, those dollars may receive the same still-working RMD treatment as the rest of that plan. Timing matters.

Any IRA RMD already due for the year has to come out first. An RMD itself cannot be rolled into a 401(k). The remaining eligible money may then be rolled over and potentially escape future required distributions while he continues working. That does not automatically make the rollover worthwhile. The current plan's fees, investment choices and rollover rules still matter. And the more-than-5% ownership rule can shut the still-working exception entirely. For someone who joined the 35% pushing retirement later, the job can therefore change more than the date on the retirement party invitation. It can change when some retirement money has to start coming out.

Know Which Account Is Still on the Work Clock

Before assuming another year on payroll postpones every RMD, check three pieces of the retirement picture separately.

1. Identify which account belongs to the current employer. The still-working exception may apply there if the plan permits it; an IRA does not receive the same treatment.

2. Ask whether the current 401(k) accepts incoming rollovers. Former-plan or eligible IRA assets may be candidates, but the year's required IRA distribution has to come out first.

3. Run the tax return with and without future RMDs. Smaller required distributions can also mean less income feeding the calculation that determines how much Social Security becomes taxable.

For millions of workers, retirement is moving later. For the 73-year-old who keeps showing up, the job may let part of his retirement money wait right alongside him.

Before Your Next Withdrawal, Run One Number ( It's Not The 4% Rule Everyone Knows)

Take your essential monthly expenses and subtract your guaranteed income — Social Security, plus any pension. What's left is your income gap, and how you close it determines whether retirement runs on share sales or on a paycheck your portfolio writes you every month. Our free reader guide, The 4% Rule Is Broken, shows exactly how to close that gap with portfolio income: a worked example (one retiree needed about $480,000 in income-producing assets to cover his essentials for good), an eight-point conversion checklist, and the 20-year numbers comparing dividends to withdrawals. It's free and takes about 15 minutes to read. Get the guide here before you take your next withdrawal.

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