Broker Check

When You’re 70 ½ Avoid These Disastrous Mistakes

January 12, 2017

This week's blog question and answer section looks into RMDs, Roth IRAs, and "still working" provisions. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure.


Good afternoon! We have a client who said he saw a special of yours on PBS, and his understanding was that he could take his RMD, pay the tax and put the balance into a Roth IRA. He has no earned income -- is this something he can do?

Thank you very much! -Lori


It appears that there is a misunderstanding here. Funds cannot go into a Roth IRA simply because they are after-tax funds. An individual can only make a Roth IRA contribution if they have earned income and if they are under the income limits for making a contribution. If they meet those requirements, then they could use funds that were paid to them as part of an RMD to make the Roth IRA contribution.


I am going to take the first RMD from a previous employer plan since I turned 70 1/2 this year. Do I also have to take a RMD from the plan I am contributing to at my current job in a municipality?

- Betty


The tax code has what is commonly called a “still working” exception to the required distribution rules for employer plans. However, this is an optional provision for employer plans.

You will have to check with your employer to see if your plan includes this exception.

By Beverly DeVeny

“Ed Slott’s Elite IRA Advisor Group” is solely an indication that the financial advisor has attended training provided by Ed Slott and Company. Ed Slott is not affiliated with Royal Alliance Associates, Inc. Securities and advisory services offered through Royal Alliance Associates, Inc. Member FINRA/SIPC. Additional advisory and financial planning offered through Affiliated Advisors, Inc. Insurance services offered through Eastern Planning Inc. Listed entities not affiliated with Royal Alliance.

Reprinted from The Slott Report, 1/05/2017, with permission. Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.

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