NEW YORK (CNNMoney.com) -- Question: My mother is still working and contributes to her 401(k). She turned 70 in June; is she required to take required minimum deductions from this plan? -- T. Kaufman, Waterford, Mich.
Answer: In 2009, Congress passed a law temporarily suspending required minimum distributions (RMDs) for 2009 because markets had performed so poorly in 2008 and many retirement portfolios were decimated. That RMD holiday is over.
Normally a person 70 ½ must withdraw by April 1 of the year following turning the age of 70½.
But because your mother is still an active employee and still participates in the 401(k), she doesn't have to withdraw funds. (Assuming she is not an owner of 5% or more of the company.)
"But check with her employer. Rarely, the employer's plan requires participants to begin receiving distributions after April 1 of the year following the age of 70 ½," said Steve Koshers, partner at Koshers & Co., CPAs, Merrick, N.Y.
However, working or not, you must begin withdrawing from an IRA at 70 ½ based upon an IRS withdrawal formula.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.94%||3.91%|
|15 yr fixed||3.05%||3.07%|
|30 yr refi||3.94%||3.97%|
|15 yr refi||3.10%||3.12%|
Today's featured rates:
CNN began 35 years ago with a style still familiar today, but with touches that are now as dated as leg warmers. More
Workers with college and graduate school degrees saw their wages fall the most last year. The least educated saw a slight bump in pay. More
A new iOS app called Abused Emojis aims to make it easier for kids to communicate abuse. More
Karlos Dansby, a linebacker with the Cleveland Browns, is bringing his winning strategy from the football field into the startup arena. More
Wealthy millennial women are more likely to make at least as much -- if not more -- than their husbands, and are more likely to be the dominant decision-makers on household finances and investments, according to a new report. More