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||3.89%||3.88%|
|15 yr fixed||2.88%||2.84%|
|30 yr refi||3.99%||3.92%|
|15 yr refi||2.98%||2.94%|
Today's featured rates:
Federal Reserve Vice Chairman Stanley Fischer told CNN International anchor Richard Quest that concern's about China's slowdown is pushing back the Fed's decision to raise rates. More
Elon Musk recently called Apple a "Tesla graveyard" that hires all the employees he's fired. But now he says he doesn't hate Apple. More
Yes, the new chip-enabled credit cards are more safe than what used to be in our wallets. But they aren't bullet-proof against fraud. More