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||3.86%||3.77%|
|15 yr fixed||3.09%||3.01%|
|30 yr refi||3.84%||3.78%|
|15 yr refi||3.10%||3.01%|
Today's featured rates:
More than 5% of DACA recipients have started their own businesses since enrolling the program, according to a recent survey. More
Tax revenue and spending both rose in fiscal year 2017, which ended last month. But spending growth outpaced revenue growth, according new numbers from the federal government. More
This may go down as the year the world officially recognized Jeff Bezos's Midas touch. More
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More
More companies are offering student loan repayment help to their employees. More