Ask a Fool: If I'm Over 70 and Still Working, Do I Need to Take an RMD?

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Q: I turned 70 1/2 this year, which means that I'm at the age at which I need to start taking required minimum distributions from retirement accounts. Does this apply if I'm still working?

Under most circumstances, required minimum distributions (RMDs) must be taken from tax-deferred retirement accounts -- such as traditional IRAs and 401(k)s -- once the account holder has reached 70 1/2 years of age. However, if you are still working, you may not have to. It depends on the type of account and whether you're still working for that employer.

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There's no RMD exception for traditional IRAs, even if you're still working full time. Your first RMD must be taken by April 1 of the year following the year in which you reach age 70 1/2.

On the other hand, if your retirement funds are in an employer-sponsored plan such as a 401(k), 403(b), or 457 plan, the rules state that your first RMD doesn't need to be taken until April 1 of the year following the year you turn 70 1/2 or the year you retire from service from the plan's sponsoring employer.

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