Do I still have to withdraw RMDs if I work past 70 1/2 years old?

If I love my job and continue to work after age 70 1/2, do I still have to take a RMD? If yes, can I still contribute to my 403(b) regardless?

Personal Finance, Lifestage Based Planning
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November 2016
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Great question! While I'd love to say simply "no" and "yes" to your questions respectively and let that be the end, I'm afraid the answer is rather "no, but..." and "yes."

Yes, if you are still working at or after age 70 1/2, you are not required to take out RMDs from your current employer plan until the year you retire. However, if you have other 401(k) plans or IRA accounts, or 403(b)s not rolled into your current employer account, you will need to take the IRS specified portion of your total combined account values NOT with your current employer and ensure that the specified amount is taken from any or all of the accounts collectively.

As a hypothetical example: You have $267,000 in your current employer 403(b), $10,000 in an IRA you setup, and $76,000 in an old 401(k) from a private school you taught at 30 years ago. The $267,000 is exempt but the $10,000 and $76,000 must be added together. You then use this $86,000 amount to figure total withdrawal necessary by dividing it by the age factor assigned by the IRS, (you can find the tables here: https://www.irs.gov/publications/p590b/index.html#en_US_2014_publink1000231236). Assuming an age of 72 at year end, a total of $3359.38 must be withdrawn from either the IRA, 401(k), or both before the end of the year to avoid the penalty. 

On the second part of the question, you are correct. You can make contributions, as long as you have income earned from a job that you are currently working.

As always, if you have need of more specific advise you should consult a qualified financial planner. Nothing within this response should be construed as individual advice, but rather general financial information.

November 2016
November 2016
November 2016
November 2016