At 74 He Can Roll His Three IRAs Into His Employer’s 401(k). As Long as He Still Clocks In, the IRS Can’t Ask Him for a Dollar From Any of Them

If you are still on the payroll in your seventies and have money scattered across old IRAs and a former employer’s 401(k), your current plan may be hiding a shelter you haven’t used. Under the still-working exception, required minimum distributions from your current employer’s 401(k) can wait until you actually retire. Your IRAs do not get that deferral on their own. But if you roll them into the plan where you still clock in, they can.

That is the strategy a 74-year-old with three IRAs can run: consolidate the outside pre-tax money into the current employer’s plan, and the whole consolidated balance sits under the same deferral until separation from service. Money moved into the current plan becomes part of that plan and falls under the same deferral.

Do This One Thing Before You Move a Dollar

Here is the trap that ruins the entire play, and you must handle it first. A required minimum distribution is not eligible to be rolled over. If you are already in a year for which an IRA distribution is required (age 73 or older under current law), that year’s RMD has to come out of the IRA before the remaining balance is rolled into the 401(k). Rolling first and taking the RMD out of the plan later does not work.

If you accidentally sweep the RMD into the plan, the amount is treated as an excess contribution in the receiving plan, subject to its own correction procedure and a 6% excise tax under IRC \u00a74973 until removed. This is the single most common way the strategy is botched, and the sequence is not optional. Distribute first, then roll second, every time.

Three Conditions That All Have to Hold

The shelter itself lives in IRC §401(a)(9)(C), which lets a non-owner employee delay RMDs from the current employer’s plan until April 1 of the year after retirement. Three permissions have to line up before you can use it for outside money.

First, the plan must have adopted the still-working exception. It is permitted, not required, and some plans force RMDs at 73 regardless. Second, the plan must accept incoming rollovers, which is also optional. Acceptance of rollovers from other 401(k)s does not automatically mean acceptance from IRAs; those are separate permissions in the plan document, and some plans allow one but not the other.

Third, only pre-tax IRA dollars generally roll in. After-tax basis from non-deductible IRA contributions typically stays behind, which matters if you ever filed Form 8606. And the participant cannot be a 5% owner of the sponsoring business, which is a separate disqualifier.

Backdoor Roth Angle Most People Miss

The deferral is only half the prize, as the pro-rata rule under IRC §7408 (d)(2) that taxes Roth conversions looks at your aggregate IRA balance on December 31 of the conversion year. Employer plan balances are excluded from that calculation. Move the pre-tax IRA money into the 401(k) before year-end, and the pro-rata denominator collapses, opening a clean backdoor Roth path in future years. If you miss December 31, the shelter does not apply to that tax year.

What You Give Up by Moving It In

Plan menus are narrower than an IRA brokerage window, and expense ratios can be higher; price it before you move. Qualified charitable distributions under IRC §408(d)(8) can only come from an IRA, so a charitably inclined retiree loses that lever on any dollar rolled into the plan. In-service distribution options are usually more restrictive. Undoing the move while still employed is difficult. On the other side, ERISA plans generally carry broader federal creditor protection than IRAs, which for some participants is itself a reason to move money in.

Retirement Day Restarts the Clock on Everything

Once employment ends, the first RMD from the plan is due by April 1 of the following year. Deferring that first payment pushes two RMDs into the same tax year, because the second one is due by December 31 of that same year. And the entire consolidated balance is now the base.

The deferral ends all at once on a bigger number, so the tax-year impact should be modeled in advance rather than discovered at tax time (we walked through how to defuse that first-year tax bomb, years before it lands, in a free guide here).

Before you initiate anything, ask the plan administrator two questions: does the plan adopt the still-working exception, and does it accept direct rollovers from traditional IRAs? Then take one distribution first, the current year’s RMD out of the IRA, and only then move the rest.

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