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?
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 Assuming an age of 72 at year end, a total of $3359.38 must be withdrawn from either the IRA, 401(k), or both before the end of the year to avoid the penalty.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.
Generally, in a defined contribution plan, like a 403(b), you will be required to take RMDs the later of April 1, the year after you turn 70 1/2, or the year you retire. If you are still working and are not a 5% (or greater) owner of the company in which you work, in most cases you will not be required to take RMDs, no matter your age, and you will still be able to contribute to the plan. Although plans can vary, I would consider consulting your plan administrator to be certain.
If your administrator informs you that under their plan you are required to take RMDs while still working, you still have options. If you have made contributions previous to 1987 and have adequate records of those contributions, you will not be required to take RMDs on the amount in which you contributed. If records are not kept for pre-1987 amounts, the entire account balance is subject to the age 70 1/2 RMD rule.
Another option is contributing to a Roth IRA. Roth IRAs do not require RMDs and can be a useful retirement savings option.
I hope that you find this helpful.
Normally when one turns 70 ½, one needs to start to take the RMD. However, if you’re not a 5% owner of the business, as long as you are still working, you may continue to fund your 403(b). Only when you retire, you must start to take the RMD by April 1st, the following year after you separate from your employment.
Be careful that this delay only applies to the work sponsored retirement plan, not IRAs, which are traditional IRA, SIMPLE IRA, and SEP IRA. Thus, if you have one of those accounts, not only must you stop funding those IRAs, you also need to start the withdrawal each and every year. Best!
Congratulations on continuing to passionately contribute to the non profit organization your are affiliated with. You are in luck. You can continue to work and contribute to your 403(b) plan past age 70 1/2, without taking required minimum withdrawals. The year you stop working, you will be required to begin your RMD by 12/31. Good luck and enjoy your holidays.
Yes to both. So long as you have earned income, you can continue to contribute to your 403(b). So long as you are over 70 1/2 years of age, you will need to take Required Minimum Distributions.
Great question! Unfortunately, the answer is not so simple.
First about contributions; so long as you have earned income after age 70 1/2, you may contribute to a retirement plan.
Now about the RMD issue. If you are still working after age 70 1/2, you are not required to take out RMDs from your CURRENT employer plan. However, you do need to take RMDs from your other plans. However, you would still be required to take RMDs from your other retirement plans not with your current employer.