I’m still working. Must I take my RMD?

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Q. If you’re 70 ½, still working and participating in your company’s 401(k), you’re not required to take a minimum distribution. Does that rule only apply to the current 401(k), or to older 401(k)s and IRA rollovers?
– Still working

A. The IRS gives you some relief if you’re still working, but not for every account.

The rule for delaying taking your Required Minimum Distribution (RMD) from a 401(k) plan only applies to your current employer, said Howard Hook, a certified financial planner and certified public accountant with EKS Associates in Princeton.

If you have other 401(k) plan balances from former employers, you must take the RMD from those accounts, he said.

There is another strategy to consider.

“If you had 401(k) plans from a former employer and you did not wish to take the RMD, you could roll over the plan balance to your current 401(k) plan, assuming that your current employer allowed rollovers,” Hook said. “This would eliminate the former 401(k) account balance so for future years no distribution would be required until after you stopped working.”

Still, Hook said, you would have to first take the RMD from the old plan and then roll it over to your existing plan.

“This is because for people over age 70 1/2, the IRS considers the first monies coming out of a retirement plan to satisfy your RMD first,” he said. “The next distribution would be considered a rollover.”

Be sure to work with an accountant to avoid any costly mistakes.

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