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Do I have to withdraw from my 403(b) at age 70.5?

June 30, 2011: 5:05 AM ET

This year I will turn 70 ½, but I do not plan to retire until I am 75. Do I have to start taking money out of my 403(b) retirement savings plan? Can I continue to contribute? —Tim, Lenexa, Va.

You can leave the money where it is until you retire. The Internal Revenue Service requires that people who have 403(b) accounts—or 401(k)s, for that matter—start taking withdrawals at whatever is the later of two dates: when they hit age 70 1/2 or when they stop working. At that point, they must start withdrawing. The amount depends upon your age and the value of your account; you can calculate it at apps.finra.org/Calcs/1/RMD .

And yes, you certainly can continue to contribute to your 403(b) until you retire. Doing so is a smart idea.

To avoid potential problems, call your plan's administrator or your school district's human resources department now. Give them the heads up that you'll be turning 70 1/2 this year but that you are still working, and ask them to make sure that your paperwork is in order so you don't get an automatic notification that a withdrawal is required. "A phone call ahead of time is easier than trying to straighten out a mistake later," says Adam Leone, a certified financial planner at Modera Wealth Management in Westwood, N.J.

Leone adds that the keep-working rule applies only to employer-sponsored retirement plans, not to IRAs. So you'll have to start making withdrawals from any IRAs you may have starting this year.

-- Walecia Konrad

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