If you're still working, you can contribute the full amount of your salary deferral to a Roth 401 (k), regardless of your age. Customers who are still working after age 70 and a half can generally continue to contribute to employer-sponsored 401 (k) accounts and SEP IRAs. In fact, employers must continue to make employer contributions to the SEP IRA of an employee over 70 and a half years old if they make similar contributions to the accounts of younger employees. Retirement plan participants and IRA account owners, including owners of IRA SEP and IRA SIMPLE, are responsible for withdrawing the correct amount of RMD on time each year from their accounts, and face severe penalties for not accepting RMDs.
The rules for contributing to an IRA after 70 and a half years depend on whether the account is a traditional IRA, a Roth IRA, or an SEP IRA. Direct contributions to a traditional IRA are not allowed after the client turns 70 and a half years old, although the client can transfer funds from another type of retirement account to their traditional IRA. An IRA owner must calculate the RMD separately for each IRA they own, but can withdraw the full amount of one or more of the IRAs. Although the IRA depositary or retirement plan administrator can calculate the RMD, the owner of the IRA account or retirement plan is ultimately responsible for calculating the amount of the RMD.
Keep in mind that those who are 70 and a half years old or older and make contributions to a traditional IRA, a SIMPLE IRA, or an SEP IRA will continue to have to apply for an RMD, even if they are still working.