A Safer Retirement and Environment – What We’re Implementing to Help Keep You Safe: READ MORE

Here at Chadmere Capital Inurance and Financial Services, we are adhering to state and local guidelines in order to protect both the health and safety of clients and staff. Keeping our clients and staff safe is our highest priority and we’re taking all appropriate measures to ensure a safe environment. Should you prefer to not meet face-to-face, we are continuing to serve our clients through virtual settings such as Zoom or phone calls.

We look forward to continuing to help individuals and families achieve their ideal retirements.

Chademere Capital Insurance and Financial Services
(803) 242-1050



By Sarah Brenner, JD
IRA Analyst


Hi Ed:

I have been reading you for more than 20 years – thank you for all your contributions to our industry.

I have a client (about to be over 70 ½) whose new employer told him that he should roll all of his old employer plans and IRAs over to the new employer’s 403b plan (in which he is participating), for the purpose of avoiding having to take RMDs when he turns 70 ½. Is this indeed a loophole that employees who work past 70.5 can use to avoid RMDs? Basically, bunching everything up into the current employer’s plan, to shelter those funds from RMD calcs?

If so, with so many people working past 70.5, this seems like it could be a lucrative loophole for many.




Hi Karen,

Yes. This strategy would work, provided a couple of requirements are met. First, the plan must offer the still-working exception and the client must qualify for it. Additionally, the plan must be willing to accept a rollover of the IRA funds. Finally, any RMD required from the IRA or the old plan for the year must be taken prior to the rollover.

While this may seem like a loophole, there is a catch that should not be overlooked. While the client may be able to delay RMDs this way, he cannot escape them forever. Eventually Uncle Sam will want his share. The client will need to start taking RMDs from the plan for the year he retires and if he has taken no RMDs up until this point, his balance will be bigger and so will his RMDs, which could mean a bigger future tax hit.



There seems to be a lot of conflicting information online regarding using Roth 401k distributions to pay for college expenses. I have even asked 3 different CPA’s and got 3 different answers.

So, if I am < 59.5 yrs old and take a distribution from my employer Roth 401k plan will it be subject to any tax and the 10% penalty if I use the funds to pay for college expenses?

Thank You!



Hi Mike,

You are right that this an area where there is a lot of confusion! Here is the good news, your contributions to your Roth 401(k) are available tax and penalty free to pay for higher education. However, earnings are a different story. If you are under age 59 ½ and you take a distribution from your Roth 401(k) to pay for higher education expenses, the earnings portion will be taxable and subject to the 10% early distribution penalty. The earnings would be taxable because paying higher education expenses does not result in a qualified tax-free distribution from a Roth 401(k). The earnings would also be subject to the 10% early distribution penalty because no exception for higher education exists for distributions from plans. This exception is available for IRAs only.

It is important also to keep in mind that your distribution would be prorated between contributions and earnings because the favorable ordering rules for Roth IRA distributions, which allow tax-free contribution to come out first, do not apply to Roth 401(k)s.


Ready To Take



For more information about any of our products and services, schedule a meeting today.

Or give us a call at (803) 242-1050

Investment advisory services offered through Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser. Nothing on this website constitutes investment, legal or tax advice, nor that any performance data or any recommendation that any particular security, portfolio of securities, transaction, investment or planning strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations, execution of required documentation, and receipt of required disclosures. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD #175083.

 ADV Part 2A & Form CRS              Privacy Policy