Roth IRA

Lord Abbett makes it easy to open a Roth IRA. As long as you, including your spouse, income qualify, you can take advantage regardless whether or not you participate in a qualified plan. Find out about a no-cost Lord Abbett Roth IRA.

This material is intended as general information only and is not intended as legal or tax advice. Some of this information may be quite complex and we strongly suggest you consult with your advisor or tax professional based on your individual situation.

What is a Roth IRA?

A Roth IRA is a potentially tax-free savings plan available to you, and your spouse also if you are married, subject to certain income requirements. Participation in a retirement plan does not affect your eligibility to contribute to a Roth IRA, unless contributing to one lowers your current income enough, allowing you to meet the income requirements. All withdrawals, including any investment appreciation, are potentially tax-free.

What You Need
to Know

Understand the key principles of individual retirement accounts.

Eligibility
Contributions
Distributions

How does it work?

You may contribute up to $5,500 in 2013. If you or your spouse is age 50 or older, you can also make a $1,000 catch-up contribution. Contributions must be made by the tax-filing deadline. This is usually April 15 of the year following the year for which the contribution was designated.

With a Roth IRA, contributions are not tax deductible ¹. However, a tax credit is available if you income qualify called a "saver's credit." All the account earnings are potentially tax-free if you are over age 59½ and the account has been established for at least five years when a withdrawal is made. In addition, unlike a traditional IRA (read about Traditional IRAs), as long as you continue to have earned income, there is no rule against making contributions to Roth IRAs after turning age 70½. There is also no requirement that you begin making minimum withdrawals at any age.

Advantages of the Lord Abbett Roth IRA

Open and fund accounts electronically
No custodial fees—for life
No hassles

Fund sales charges may apply.

Who should consider a Roth IRA?

If you income qualify and you do not need or significantly benefit from receiving a current tax deduction on the contribution and/or receiving tax-free income from your IRA.
If you believe future tax rates will be higher than today's tax rates, so that dollars coming out, from a tax perspective, are worth more than dollars being contributed.
If you are contemplating passing your Roth account along to the next generation, providing a tax-free legacy. This tax-efficient transfer is made easier, as the Roth IRA does require you to take withdrawals while you are alive. If your spouse inherits your Roth IRA he/she also does not need to take withdrawals while still alive.

How does a Lord Abbett Roth IRA benefit you?

A Roth IRA offers several tax benefits, including:

Earnings are federal income tax-free if withdrawn after age 59½ and if the account has been established for at least five tax years.
Beneficiary designations can be structured as a Stretch IRA to allow income tax-free payouts to extend over many years.
A traditional IRA may be converted to a Roth IRA, regardless of your adjusted gross income (AGI).² Visit our Roth Conversion Resource Center for more details.
You can diversify income (taxable and tax free) in retirement.
Roth distributions are not considered part of AGI ² and could help create a scenario where not only do you have tax-free Roth income in retirement, but Social Security payments could also be tax-free.
Tax-efficient distributions can be generated prior to age 59½ that can be used to supplement income or generate early retirement income. (See Roth IRA distributions.)
Establishing a Roth IRA starts the five-year clock on future Roth distributions from a qualified plan.

¹ An item or expense, such as an IRA contribution, which, when subtracted from adjusted gross income, reduces the amount of income subject to tax.

² Adjusted gross income includes wages, interest, capital gains, income from retirement accounts, and alimony paid to the taxpayer adjusted downward by specific deductions (including contributions to deductible retirement accounts and alimony paid by the taxpayer), but not including standard and itemized deductions.

Lord Abbett will waive (or otherwise pay) the yearly $10.00 custodial fee that would be charged each year on an ongoing basis to every new IRA account and, therefore, will not assess a custodial account fee in 2013 or any year afterward. Free also applies to the Federal Express (FedEx) charges currently absorbed by the B/D to submit paperwork to DST to open a Lord Abbett IRA account. Fund level fees and expenses are still applicable. Please see the current prospectus.