IRA Rules

Posts Tagged ‘rules on iras’

Question: Questions regarding 401(k). 70 year old, still working?

Person was 70 on 12/25/07 and is still working full time. She has a 401(k) Profit Sharing plan where she works. Does she have to start taking out of it this year? 70 1/2 rule. Can she establish a Traditional IRA at her bank and roll it over to that, or would that make any difference? Any advice or details would be appreciated!

Answer: As long as you are still working, contributions can continue to that 401(k) and you don’t have to start withdrawals, but distributions must start on IRAs starting for the year during which you reach 70 1/2. If you then roll the money into an IRA, it’s no longer in a 401(k) with the company you are currently employed with, is it?

The penalty for not taking the Required Minimum Distribution is a whopping 50% of what you were supposed to have taken out.

Stocks, Mutual Funds & Retirement Investments : What Are the Rules of Short Stocking?