I am 81 and employed part time in a business owned by my sons. I am required to take my 401 distribution because I am related to the owners. I reinvest the proceeds & wonder if there is something to put the money in that is tax free??
First, congratulations on being 81 and still enjoying working — and the benefits of a 40l(k) plan. You fall under a rare category of people who, though still working, must take distributions from a 40l(k) plan — having nothing to do with the age 70-1/2 RMD rule. Here’s an article from Bankrate describing your situation:
Another exception to the required minimum distribution rules is when you continue to work. You still have to make mandatory withdrawals from your IRAs, but you can delay taking them from your current employer-provided plan, such as your 401(k), until April 1 of the year after you retire. (Employees who own more than 5 percent of the company sponsoring the plan can’t use this delaying tactic, however; they must start distributions from their 401(k) accounts after age 70 1/2, regardless of whether they continue to work.)
I wonder why — if you have earned income — you don’t put the money into a Roth IRA — from which you would never be required to take withdrawals? You’d have your choice of investments at a place like Fidelity. And all the money would grow tax free, and could be passed on to your beneficiary. Check with your tax advisor to see if you can do this.