Summers, McNea & Company, PC


80 25th Street West, Billings, MT 59102


Phone: 406-652-2320

Fax:     406-652-2043

October 2018

October 2018 Client Profile

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Jerry is the owner of an architectural firm. He is 50 years old and wants to work past normal retirement age, but he wants to continue saving for an eventual retirement. Jerry wants to know if he is still required to take required minimum distributions at age 70½ if he is working.

Federal law requires owners of retirement accounts like 401(k)s and IRAs to begin taking required minimum distributions (RMDs) beginning around age 70½. Jerry can delay RMDs from a 401(k) plan if he doesn’t own at least 5% of his company and it offers this option in its retirement plan while he continues to work.

If he owns more of the company and qualifies by income, Jerry might want to consider a Roth IRA, into which he makes after-tax contributions but tax-free withdrawals. Anyone with earned income (and who qualifies by income) is eligible to contribute to a Roth IRA, and it has no RMDs during its lifetime.

If he has a Roth 401(k) plan, Jerry might want to talk to his accounting professional to learn about rolling it over into a Roth IRA, since the latter doesn’t have RMDs.

Client Profile is based on a hypothetical situation. The solutions discussed here may or may not be appropriate for you.


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