Would I need to take a distribution from my 401k if I'm still earning a paycheck when I'm 70 1/2?
The good news for you is that won’t have to take RMDs for your 401(k) from your current employers plan while still employed there. You will still need to take RMDs from old 401(K) plans or IRA.
Consult with your tax professional for more specifics. Also check out the article "RMD Tips : Maximize your Retirement Savings" if you want some ideas of ways to make the most of your RMDs that you don’t want to spend right now.
Yours In Success,
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Great question. The RMD rules can be confusing. If you are still working and have a 401(k) with your current employer, you would not need to take RMD's from that 401(k). However, if your have IRA's that are unrelated to your current employers retirement plan, you would be subject to RMD's from those accounts.
Make sure to consult with a tax professional to see how the RMD rules would apply to your specific situation. It has been my experience that, if your current 401(k) allows it, you could actually roll any IRA's you may have into the current 401(k) plan to avoid RMD's on that money. Again, confirm this with a tax professional and consult with your HR person to see if you can roll money into the current plan.
Here is a link to some more information on rollovers and what the IRS does and does not allow.
If you are still employed with the company throughout the year, and don't own more than 5% of the company, you are not required to take an RMD from that specific 401k account. Other 401k's from earlier employers and any traditional IRA accounts will still require an annual RMD, though.
Of course, you can (if allowed) roll your other 401k's and traditional IRA's into the current employer 401k can avoid RMD's on the entire amount!
Best of luck!
You do not have to take a distribution from your current 401K if you are still employed and are not a 5% owner of the company. (ie you do not have an ownsership interest more than 5% in the company). However, you will have to take a distribution from your old 401Ks if you are older than 70.5 years. One option to bypass this is to rollover your old 401K plan to your current 401K plan if the current plan allows it.