401K contribution after 70.5
I have a client who asked if they can still contribute to their 401K after 70.5? Also, can the company contribute after 70.5 at this time they are only 69 and the owner of the business?
Also, is this rule different for a non-owner like the RMD rules?
Permalink Submitted by Alan Spross on Mon, 2011-09-12 18:20
Yes, contributions to an employer plan can continue without any age limit and this includes SEP and SIMPLE IRAs as well. However, the RMD rules differ. For SEP and SIMPLE IRAs, RMDs must still begin at 70.5 despite the fact that new contribution are still allowed.
But for qualified plans, the required beginning date is extended to 4/1 of the year following the year of retirement or separation in most all cases, although it is legal for a plan to require that RMDs must start at 70.5 if that requirement is written into the plan. For 5% owners or owners of a solo K plan, RMDs MUST start at 70.5 and cannot be delayed until retirement.