Ask the Expert: FYI about taking RMDs

You've written that someone who's still working at age 701/2 doesn't have to take required minimum distributions (RMDs) from her current employer's 401(k) plan. If I'm still working after 701/2, will I be exempt from taking RMDs from my 457 plan? Can I continue making contributions to the plan?

There's no legal age limit for making contributions to your current employer's retirement plan, whether it's a 401(k), a 403(b) or a 457 plan.

Assuming you don't own 5 percent or more of the company that employs you, you're not legally required to take RMDs from its retirement plan until April 1 of the calendar year after you stop working there. As noted in my earlier column, this exemption does not apply to your IRAs or to any retirement account balance that you may have in a former employer's plan. You must start taking RMDs from those accounts after you turn 701/2, regardless of whether you're still working.

In fact, if you still have accounts in the retirement plans of former employers, those plans may require you to withdraw your entire balance after you turn 701/2. The law says that if your account balance in an employer's plan is $5,000 or more, you can leave your money there even if you no longer work there. But that law only applies until normal retirement age. At that point, a former employer's plan can require you to withdraw your money. This doesn't mean you have to take a taxable withdrawal from the plan. You can move your account balance into an IRA and take RMDs from the IRA.

The bottom line In most cases, you aren't required to take distributions from your current employer's retirement plan, regardless of your age.

Websites with more information 1.usa.gov/14Ch4A0 and bit.ly/13Ow7as

TO ASK THE EXPERT: Send questions to Ask the Expert / Act 2, Newsday Newsroom, 235 Pinelawn Rd., Melville, NY 11747-4226, or email act2@newsday.com. Include your name, address and phone number. Questions can be answered only in this column. Advice is offered as general guidance. Check with your own advisers for your specific needs.