SECURE ACT-IRA for over 70 1/2 receiving RMD

[rhb401]

Under the SECURE ACT, can an "actively employed" over-70 1/2 who has been receiving RMD for 4-5 years make IRA contribution starting in 2020? Would they have to take their RMD and then turn around and contribute to an IRA?

[justanotheradmin]

I don't see why not - but -

If they have access to a 401(k) plan wherever they are employed they could have accomplished the same thing even before SECURE. Are they making 401(k) deferrals there?  401(k) plans typically don't have any restrictions on participant age for contributions. At least I've never seen one restrict deferrals to participants based on age of participant. 

Edit to add: if the RMDs were required before - they continue to be required. So yes, the person should continue taking them. Unlike IRAs, a person's ability to make 401(k) deferrals does not end upon a certain age or because they have to take RMDs. I have seen employees in their 70s INCREASE their deferrals because they want to offset the tax impact of their RMDs. 

[rhb401]

The Plan in which the individual was a participant was a SAR-SEP which terminated. 

[Larry Starr]

38 minutes ago, rhb401 said:

The Plan in which the individual was a participant was a SAR-SEP which terminated. 

That just means that the account you are dealing with is an IRA (which is the funding vehicle for a SAR-SEP).  So, you are following the IRA rules (you can ignore that it was a SAR-SEP).  

The answer to your questions:  1) Yes, he can now make IRA contributions because of the elimination of the maximum age limit. 

2) They still have to take their RMDs, but the timing is not germaine; they take their distribution by 12/31 for any given year, but they have until 4/15 to make their IRA contribution for the prior year.

[rhb401]

Thanks to all. Most helpful.