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My understanding is that RMDs on traditional IRAs kick in when the holder of the IRA becomes 70 and a half (even if he is still working), whereas (as long as the person is still working) he doesn't yet have to take any RMDs from the 401(k). Correct?

culcha
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My understanding is that RMDs on traditional IRAs kick in when the holder of the IRA becomes 70 and a half (even if he is still working), whereas (as long as the person is still working) he doesn't yet have to take any RMDs from the 401(k). Correct?

Pretty much. RMD's on traditional IRAs start for the year you turn 70 1/2 regardless of your working status. Also, starting that year you can no longer contribute to a traditional IRA. These provisions do not apply to Roth IRAs.

As for 401(k)'s you do not have to start RMD's from your current plan until you leave that employer. However, if you have other 401(k)' still lying around from prior employment they must begin RMD's regardless of the fact that you're still working.

Details are in Publication 575.

Phil
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Phil, I have a SEP-IRA through my SubS corp. Will I have to take RMD's from it at 70-1/2, although I will still be working and the corp contributing to it?

Donna
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I have a SEP-IRA through my SubS corp. Will I have to take RMD's from it at 70-1/2, although I will still be working and the corp contributing to it?

Yes, you'll be required to take RMD's even though you're still working, just like for any other traditional IRA.

Beginning with the year you turn 70 1/2 you may no longer make traditional IRA contributions. However the employer can continue making SEP contributions to your account as long as you're working.

See Chapter 2 of Pub 560.

Phil
Rule Your Retirement Home Fool
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