Traditional IRA

Lord Abbett makes it easy to open a traditional IRA. As long as you, including your spouse, are under age 70 ½, you can take advantage of the option regardless of your income or whether or not you participate in a qualified plan. Find out about a no-cost Lord Abbett traditional 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 Traditional IRA?

A traditional IRA is a tax-deferred¹ savings plan available to you, if you are under age 70½, and your spouse, if your spouse is also under age 70½. It is set up for your exclusive benefit, although your designated beneficiary(ies) may ultimately receive the proceeds.

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 per year. If you are age 50 or older, you can make an additional $1,000 catch-up contribution. Contributions must be made by the tax-filing deadline. This is usually April 15 following the year for which the contribution is designated.

With a traditional IRA, you may be able to deduct the contribution from taxable income, reducing current income taxes, or, if you income qualify, a tax credit (called a "saver's credit") is available. Taxes on any investment appreciation are deferred until the money is withdrawn. Withdrawals are taxed as additional ordinary income when received. Nondeductible contributions, if any, are withdrawn tax-free. Taxable withdrawals before age 59½ may be assessed a 10% penalty, in addition to the taxes payable, unless an exception applies.

Advantages of the Lord Abbett Traditional IRA

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

Fund sales charges may apply.

Who should consider a Lord Abbett Traditional IRA?

If you are not covered by a qualified plan and need tax-deferred¹ retirement saving.
If you have fully funded a tax-deferred¹savings plan at work such as a 401(k) or 403(b) and want additional tax deferral on your savings.
If you need to supplement your workplace retirement savings.
If you are a non-working spouse and have little retirement savings of your own.
If you wish to seed your account with non-deductible dollars to take advantage of the Roth conversion opportunity. (Read Roth IRA Conversion Information.)

How does traditional IRA benefit you?

A traditional IRA offers several tax benefits, including:

Earnings are federal income tax-deferred¹ until withdrawn, and no withdrawals are required until you reach age 70½.
Beneficiary designations can be structured to create a Stretch IRA, allowing payouts to extend over many years.
A traditional IRA may be converted to a Roth IRA, regardless of the taxpayer's adjusted gross
income (AGI).²
Traditional IRA assets can also be used tax-efficiently to pay non-retirement expenses, such as post-secondary education tuition or a down payment on a home. (Read traditional IRA distribution rules.)
Tax-efficient distributions can be generated prior to age 59½ that can be used to supplement income or generate early retirement income. (Read traditional IRA distribution rules.)
Traditional IRAs are protected from bankruptcy up to the first $1,000,000.

This information is being provided as general information and is not intended to be legal or tax advice. Lord Abbett does not provide legal or tax advice.

¹ Income whose taxes can be postponed until a later date; examples include IRAs and 401(k) plan earnings.

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.

There may be fees, expenses, taxes, and penalties associated with early IRA withdrawals.

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.