RMD Rules for Self-Employed Retirement Accounts
SEP-IRAs, SIMPLE IRAs, and Solo 401ks all follow standard RMD rules: distributions must begin at age 73 (75 for those born 1960+) using the IRS Uniform Lifetime Table. There is no still-working exception for these accounts — self-employed individuals must take RMDs from these accounts at the required age regardless of continued business activity.
RMD rules for self-employed retirement accounts
| Account Type | RMD Start Age | Aggregation Rules | Unique RMD Feature |
|---|---|---|---|
| SEP-IRA | Age 73/75 | Can aggregate with other traditional IRAs | Same rules as regular IRA |
| SIMPLE IRA | Age 73/75 | Can aggregate with traditional IRAs | Same rules as regular IRA |
| Solo 401k | Age 73/75 | Cannot aggregate with IRAs — separate calculation | Still-working exception does NOT apply |
| Defined Benefit Plan | Age 73/75 | Separate actuarial calculation | Actuary typically calculates for you |
The High Balance Challenge for Successful Self-Employed
Self-employed individuals can contribute up to $70,000/year to a Solo 401k in 2025 — far above the $7,000 IRA limit. Consistent maximum contributions over 25-30 years create account balances of $3-$5M+, generating enormous RMD obligations at age 73. The aggressive Roth conversion strategy is even more critical for self-employed high-savers.
Contributing $50,000/year to a Solo 401k for 25 years at 7% return creates a $3,175,000 account balance. First-year RMD at age 73: $119,811 on top of Social Security and any other income — firmly in the 32%-37% bracket. For self-employed high-earners early Roth conversion planning is essential.
Self-employed RMD impact by contribution level
| Annual Contribution | Years | Account at Age 68 | Age 73 RMD | Bracket Impact |
|---|---|---|---|---|
| $30,000/yr at 7% | 25 years | $1.9M | $71,698 | 24%–32% territory |
| $50,000/yr at 7% | 25 years | $3.18M | $119,906 | 32%–37% territory |
| $70,000/yr at 7% | 25 years | $4.45M | $167,925 | 37%+ territory |
Pre-Retirement Roth Strategy for Self-Employed
Self-employed business owners who reduce their business activity or transition to retirement have a unique advantage: business income drops before the traditional retirement account RMD clock starts. This creates an ideal window for Roth conversions. Sell the business at 60, income drops dramatically, and you have 13 years to convert at low rates before age 73 RMDs begin.
- Choose a Solo 401k with a Roth option to build tax-free assets from the beginning
- Transition from SEP-IRA to Solo 401k to access Roth 401k contribution option
- After business sale in low-income years: aggressively convert SEP-IRA or Solo 401k to Roth
- Use QCDs beginning at age 70.5 from IRA accounts to offset RMD income tax burden
Calculate Your Self-Employed RMD Obligation
Enter your SEP-IRA or Solo 401k balance to see your projected RMD amounts and tax impact at each age.