Required Minimum Distributions While Working? Find Out in Mailbag

By Marvin Rotenberg, IRA Technical Expert

This week’s Slott Report Mailbag discusses some complex, timely issues involving social security benefits and required minimum distributions while working past age 70 1/2. As always, we stress the importance of working with a competent, educated financial advisor to keep your retirement nest egg safe and secure.


Ed and Company,

My spouse is 67 and I am 66. We are not receiving social security benefits at this time (we plan on waiting until age 70). I recently read that if one of us signs up for social security now, and then requests a suspension, that the other can sign up for a spousal benefit. There are no reductions when we take the full benefits at age 70.

We are looking for advice/guidance in this matter. Do you have any suggestions?


Jackie Byrd

Yes you have several options of when and how to take Social Security for you and your spouse. I would suggest contacting your local social security office. They are very good at explaining all your options. You can also find a lot of information on your different options on the Social Security website,


I’m now 70 ½ but still working full time. I have my retirement savings in a 401(k) plan sponsored by my employer, with monthly contributions. I’m planning to work until I’m about 75 years old and would like to keep my savings untouched until then. I read that while I’m still working I cannot be forced by the IRS regulations to take annual distributions from my 401(k) account, even if I’m over 70 ½ years old. Is that correct?

Thank you for your advice.

You are correct. The IRS regulations now allow you to not take required minimum distributions (RMDs) from employer plans at age 70 1/2 if you are still working for the company that sponsors the plan and you do not own more than 5% of the company (this does not include SEP and SIMPLE plans). You can also continue having money from your salary deposited into your 401(k) plan while you are still working after age 70 ½ and you may also be entitled to an employer match for your deferrals. However, all of these options are not mandatory but must be allowed by the employer plan. When you retire, your required beginning date is April 1 of the year following your retirement. This means that you will have to take an RMD for the year of your retirement which can be deferred to the April 1st date. Your second RMD must be taken for the year after your retirement. If you defer that first distribution, then you will have to take two distributions in the year after your retirement.


Ed and Company,

Greatly enjoy your PBS specials.

I am 60 years of age. If I take a lump sum from my TSA, I know they hold 20% for the IRS. However, are there any other pitfalls, as this will boost our 2010 adjusted gross income from 78k to about 140k. I am always concerned about surprises like the alternative minimum tax law. Your help is most appreciated.


D. Thompson

One way to defer income tax on a lump-sum distribution is to do a direct rollover (trustee to trustee transfer) to an IRA. There would not be any 20% withholding on this type of distribution. If you take a lump sum distribution but do not do a rollover to an IRA within 60 days, then the total amount of the lump-sum distribution minus any after tax dollars, if any, will be added to your income in the year you receive the distribution. As your income increases, your tax bracket may increase and you may start to have some of your deductions begin to phase out. Before taking a lump-sum distribution you should consult a competent financial advisor with special knowledge in this area. You might want to consult our web site and click on find an advisor to locate an advisor in your area that has been trained by Ed Slott & Co.

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