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Retirement Perspectives

Here is some helpful last-minute info for investors in retirement and education savings accounts.

With a new tax law in place, 2018 will be the first time when year-end planning will be different for many investors. I discussed a number of the new tax rules affecting tax-advantaged accounts in our December 4th webinar, “Our Top Year-End Tips on Retirement & Education Investing.” Here’s how to catch the replay

In the webinar, I covered a variety of topics, including retirement policy, new rules and regulations, the importance of being familiar with the myriad of rules impacting required minimum distributions (RMDs), Roth conversion strategies, and more. Given the large number (and range) of inquiries, I’ve assembled a compendium of our most popular articles for your convenience.

In addition, I’ve recapped a few questions and answers from the call.

Q. Is a beneficiary QCD eligible?
A.
Yes, as long as the beneficiary has reached age 70½.

Q. Is an individual older than 70½ eligible for a Roth conversion?
A.
Yes. However, an RMD must be taken first.

Q. Does an income test apply to the “back-door” Roth strategy?
A. No. Generally, anyone younger than 70½ with earned income is eligible. To learn more about the “back-door” Roth strategy, see my column.

Q. How is my individual retirement account (IRA) impacted during a divorce?
A. Please see my column, “Dividing Retirement Assets in a Divorce.”

 

To comply with Treasury Department regulations, we inform you that, unless otherwise expressly indicated, any tax information contained herein is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed under the Internal Revenue Code or any other applicable tax law, or (ii) promoting, marketing, or recommending to another party any transaction, arrangement, or other matter.

The information is being provided for general educational purposes only and is not intended to provide legal or tax advice. You should consult your own legal or tax advisor for guidance on regulatory compliance matters. Any examples provided are for informational purposes only and are not intended to be reflective of actual results and are not indicative of any particular client situation.

The information provided is not directed at any investor or category of investors and is provided solely as general information about Lord Abbett's products and services and to otherwise provide general investment education. None of the information provided should be regarded as a suggestion to engage in or refrain from any investment-related course of action as neither Lord Abbett nor its affiliates are undertaking to provide impartial investment advice, act as an impartial adviser, or give advice in a fiduciary capacity. If you are an individual retirement investor, contact your financial advisor or other fiduciary about whether any given investment idea, strategy, product or service may be appropriate for your circumstances.

GLOSSARY OF TERMS

Traditional IRA contributions plus earnings, interest, dividends, and capital gains may compound tax-deferred until you withdraw them as retirement income. Amounts withdrawn from traditional IRA plans are generally included as taxable income in the year received and may be subject to 10% federal tax penalties if withdrawn prior to age 59½, unless an exception applies.

A Roth IRA is a tax-deferred and potentially tax-free savings plan available to all working individuals and their spouses who meet the IRS income requirements. Distributions, including accumulated earnings, may be made tax-free if the account has been held at least five years and the individual is at least 59½, or if any of the IRS exceptions apply. Contributions to a Roth IRA are not tax deductible, but withdrawals during retirement are generally tax-free.

401(k) is a qualified plan established by employers to which eligible employees may make salary deferral (salary reduction) contributions on an aftertax and/or pretax basis. Employers offering a 401(k) plan may make matching or nonelective contributions to the plan on behalf of eligible employees and may also add a profit-sharing feature to the plan. Earnings accrue on a tax-deferred basis.

About The Author

Webinar Replay: Our Top Year-End Tips on Retirement & Education Investing
video
Listen to our recent discussion with Brian Dobbis, Director of Retirement Solutions, about year-end tips for retirement and education savings.

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