Can I Join a 401(k) Over 70.5?

by Jack Ori

401(k) accounts are tax-deferred retirement-savings accounts. Typically, you elect to have a portion of your paycheck withheld and deposited into your 401(k) account. You can't withdraw the money until you reach the age of 59.5 without incurring tax penalties, and once you turn 70.5, you must begin taking money out. If you are still working at the age of 70.5, you can continue to contribute to your 401(k) and can even start a new 401(k) if you wish.

Minimum Required Distributions

In most cases, you have to begin taking distributions from your 401(k) account once you reach the age of 70.5 years. Your minimum required distribution is calculated by dividing the account's adjusted market value by the lifetime expectancy of the account. You must take the distribution by April of each year starting in the year you turn 71.5. If you fail to do so, you must pay a penalty tax of 50 percent of your minimum required distribution.


If you are still working when you turn 70.5, you can defer your minimum required distribution until the year following the year you officially retire. Thus, you can continue to work and contribute to your retirement account for as long as you are working without having to take out anything. Once you retire, the rules work the same for you as they would have when you turned 70.5 if you hadn't been working. However, if you own more than 5 percent of the company, you can't defer your minimum required distributions.


The government regulates 401(k) accounts because you're supposed to use them to provide for yourself in your retirement and pay taxes on them at that time. If you left your money in the 401(k) indefinitely, you could give it to your heirs without paying any taxes on it. Thus, the penalty tax ensures that you still pay taxes if you use your 401(k) for an improper purpose.

Joining a 401(k)

You usually sign up for your 401(k) when you are hired. If you want to do so later, contact your payroll or human resources department to get the necessary paperwork. You can first sign up for a 401(k) after the age of 70.5 if you are still working then, but you won't be able to amass very many funds for your retirement at that point, since you will be near the end of your career.

Photo Credits

  • Comstock Images/Comstock/Getty Images