Distributions

Submitted by RICHARD KING on Tue, 2014-08-19 17:26

If one turns 70 in July and continues to work may they continue to contribute to there 401 and for how long? In addition when are they required to take the money out, there are also a few IRA’s in banks, what if any are the distribution requirements on these funds?



Submitted by Alan - IRA critic on Tue, 2014-08-19 18:37

  • They can contribute to contribute as long as they wish to ther 401k. Unless they own 5% or more of the company, RMDs can usually be delayed until after they retire.
  • For IRAs, the usual RMD rules continue to apply regardless of whether taxpayer is working or not. If taxpayer has earned income, they can contribute to a Roth IRA, SEP or SIMPLE IRA, but not to a traditional IRA once they reach 70.5. If there are several IRA accounts, the RMD must be calculated separately for each of them, but can be withdrawn in any combination including the total RMD from just one of the IRA accounts. 401k and IRA RMDs cannot be combined with each other.


Submitted by RICHARD KING on Fri, 2014-08-22 14:51

Can you still qualify for deductions if you continue to work on a part time basis.



Submitted by Alan - IRA critic on Fri, 2014-08-22 17:52

Since you can no longer contribute to a traditional IRA starting in the year you reach 70.5, there is no deduction available for these accounts. However, 401k contributions are still pre tax, as are SEP IRA or SIMPLE IRA contributions.



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