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||4.19%||4.23%|
|15 yr fixed||3.18%||3.23%|
|30 yr refi||4.15%||4.14%|
|15 yr refi||3.17%||3.16%|
Today's featured rates:
Georgia dealers say Tesla shouldn't sell its cars directly to consumers. It's also one of the most popular markets for electric vehicles. More
If approved by Los Angeles city council, the plan could raise wages for 567,000 workers by 2017. More
A scam where fraudsters impersonate IRS agents has now stolen $5 million from taxpayers, and this woman - who lost her entire life savings -- is just one of its victims. More