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

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

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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

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 principal at Forteris Wealth Management which is an independent, fee-only firm with offices in Framingham and Purchase, NY. She advises clients on investing, education funding, taxes and retirement planning. She has a BS from Worcester Polytechnic Institute and an MBA from Boston University and she is a Certified Financial Planner.

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.