Working at 70, what's her 401(k) RMD

By Amelia Ross, editor


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.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.08%4.12%
15 yr fixed3.23%3.21%
5/1 ARM3.46%3.30%
30 yr refi4.14%4.12%
15 yr refi3.28%3.21%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 16,699.25 -105.46 -0.63%
Nasdaq 4,380.92 -41.17 -0.93%
S&P 500 1,929.97 -16.19 -0.83%
Treasuries 2.41 0.01 0.33%
Data as of 11:38am ET
Company Price Change % Change
Bank of America Corp... 16.80 -0.02 -0.15%
Apple Inc 98.53 -0.65 -0.65%
Ford Motor Co 14.60 0.01 0.07%
Facebook Inc 76.35 -0.20 -0.26%
Micron Technology In... 33.35 -0.15 -0.45%
Data as of 11:23am ET

Sections

The bull market hit some turbulence in September, but that didn't stop these stocks from generating lots of interest from investors. More

The president of the European Central Bank was unveiling details of a program that is aimed at stimulating the economy by getting banks to lend more to European companies and consumers. More

While big chains are telling customers to stop bringing in guns, some small restaurants are embracing them. More

Linda Tirado's post about her life in poverty went viral in 2013. She is now the author of 'Hand to Mouth.' More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.