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Must a working employee withdraw money from 401k plan per IRS R.M.D. table when she reaches 70 & half?

• I would appreciate any Income Tax Specialist, IRS Agent to answer this question - I have a friend who has reached the age 70 & half in April, but still working full time. She has 401K Plan and a cash pension plan with her company. We know if any one who retired and reached 70 & half should withdraw money from the 401K plan starting from the year she retires. Using the total 401K 12/31 balance divide 27.4 is the 1st year R.M.D. Our question is: Does she has to start the R.M.D. if she is still working full time? Which tax code will clearly explains whether she should withdraw or not this year? We know if she needs to withdraw, she has to withdraw before 12/31/10. If she does not need to withdraw this year, she probably should withdraw in the year she retires. Please help - December 31 is very close. We are not clear at this point. She must make a right decision. Thank you so much for help! The 401K plan we are talking here is currently managed by a Wall Street investment bank through her company.

• Answer:

  She needs to consult w/ her Administrator at work.. who should sit down and explain everything.. to her.. but if not then it is to her advantage to consult a specialist before the fact.. rather than after the fact.. good luck