401k Contributions after 70.5
If you are still working, can you continue to contribute to a 401k after you have reached age 70.5 and are taking RMDs?
If you are still working, can you continue to contribute to a 401k after you have reached age 70.5 and are taking RMDs?
Permalink Submitted by Denise Appleby on Tue, 2007-08-21 19:16
Yes. There is no age limit on making contributions to 401(k) plans. As long as the participant satisfies the eligibility requirements, he/she should share in contributions made to the plan- and be permitted to make salary deferral contributions to the plan, if the plan includes salary deferral features. This applies even if the individual is taking distributions from his/her account. But please see [url]http://retirementdictionary.com/Required-beginning-date.htm%5B/url%5D for information on when RMDs should begin from a 401(k) plan. Accordingly, if the individual is till employed, he/she would not be taking RMDs from the plan- and distribution would be voluntary
Permalink Submitted by Todd Witt on Tue, 2007-08-21 19:20
Thank You
Permalink Submitted by [email protected] on Tue, 2007-08-21 19:25
Yes, however most QRPs would not require RMDs while still working.
Permalink Submitted by Alan Spross on Tue, 2007-08-21 20:42
It should probably be determined if the RMDs are assumed to be required or the plan officially requires them. A plan MAY opt to require the RMDs even though the IRS Regs do not require them while still meeting plan specs for continued employment, and not a 5% owner. However, most plans conform to the Regs which do NOT require RMDs until April 1 of the year following retirement.
Another possibility here is that discretionery distributions are being taken as allowed by age, but are not actually RMDs, and could be stopped. Finally, there could be some confusion all around if phased retirement provisions are being incorporated and plan amendments are not keeping pace.