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When You're 70 1/2 Avoid These Disastrous Mistakes

By Beverly DeVeny
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This week's Slott Report Mailbag 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. You can find one in your area here.


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. 


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