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I'm still working at 70, do I need to take 401(k) withdrawals?

Posted by Cheryl Costa October 13, 2008 10:00 AM

I just turned 70 years old and I am still working full time. I have been told by the administrator of my 401(k) that within the next six months I will need to pull my money or begin withdrawing from my 401(k). What would be my best option?

I'm not sure what you or your administrator mean by "pull your money" but I would ask the administrator to double-check their information. Generally speaking, if you are still working at 70½, you can postpone withdrawals from your 401(k) until April 1 of the year following the year you retire.

Different plans have different rules so it is technically possible that your plan requires distributions but generally that is not the case. One exception occurs if you own at least 5% of the company. In that situation, you generally can’t postpone taking distribution and you must begin withdrawals on the regular schedule.

An important point to note: you can only postpone distributions past age 70 1/2 for the plan in place at the company you work at now. If you have old 401(k)s from previous employers, you must begin taking withdrawals from those accounts.

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Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.
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About the contributors

Jill Boynton is co-founder of Cornerstone Financial Planning in Newington, N.H. Along with traditional financial planning services, Boynton provides analysis specifically for divorce.
Andrew Chan is the founder of Integrative Financial Advisors in Framingham. He provides comprehensive financial planning advice and investment management services. He has been an adviser for over 12 years and works with clients to integrate all aspects of their finances including investments, retirement, education funding, and tax planning.
Cheryl Costa is a managing director at AFW Wealth Advisors, which has offices in Natick and Purchase, N.Y. She advises clients on investing, education funding, and estate planning. She holds a master’s in business administration from Boston University.
Jamie Downey has been an accountant for more than 14 years. He's a partner at Downey & Co. in Braintree. Prior to joining the firm, he served as a manager in the audit department of accounting firm KPMG.

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