Risks to Consider:
The income derived from municipal securities may be subject to the alternative minimum tax. Federal, state, and local taxes may apply. There is a risk that a bond issued as tax-exempt may be reclassified by the IRS as taxable, creating taxable rather than tax-free income. In addition, bonds may be subject to other types of risk such as call, credit, liquidity, interest-rate, and general market risks.
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.
Required Minimum Requirement (RMD) is the amount that Traditional, SEP and SIMPLE IRA owners and qualified plan participants must begin distributing from their retirement accounts by April 1 following the year they reach age 70.5. RMD amounts must then be distributed each subsequent year.
Adjusted Gross Income (AGI) is a measure of income used to determine how much of your income is taxable. Adjusted gross income (AGI) is calculated as your gross income from taxable sources minus allowable deductions, such as unreimbursed business expenses, medical expenses, alimony and deductible retirement plan contributions. Also referred to as "net income."
Affordable Care Act is a federal statute signed into law in March 2010 as a part of the healthcare reform agenda of the Obama administration. Signed under the title of The Patient Protection and Affordable Care Act, the law included multiple provisions that would take effect over a matter of years, including the expansion of Medicaid eligibility, the establishment of health insurance exchanges and prohibiting health insurers from denying coverage due to pre-existing conditions.
American Taxpayer Relief Act of 2012 is a U.S. bill signed by President Obama on January 2, 2013, that had numerous provisions affecting Americans' income tax bills. The American Taxpayer Relief Act of 2012 averted the tax aspect of the "fiscal cliff" by preventing many tax breaks from expiring as scheduled. Furthermore, it delayed mandatory congressional spending cuts called "the sequester" until March 2013. It also raised the marginal tax rate for certain high-income households, extended various tax credits, capped the estate tax and patched the alternative minimum tax, among other things.
Deductible IRA Contributions
Single individuals, covered by an employer sponsored plan, can fully deduct their IRA contribution when income is below $59,000 in 2013 ($60,000 in 2014). A partial deduction is available in 2013 if the income is above $59,000, but does not exceed $69,000 ($60,000 to $70,000 in 2014).
Once qualified plan participation extends to either member of a married couple the rules change. For 2013 contributions, couples filing jointly, where only one spouse is covered by an employer sponsored retirement plan, the spouse not covered may deduct the full IRA contribution if the couple's joint income is less than $178,000. A partial deduction is available if the couple's joint income is greater than $178,000 but does not exceed $188,000. No deduction is permitted once joint income exceeds $188,000. These income limits increase to $181,000 and $191,000, respectively, regarding any contribution made for calendar year 2014.
If an individual is married and both spouses are covered by an employer-sponsored plan during 2013, fully deductible IRA contributions are permitted if joint income is less than $95,000. A partial deduction is available if the couples joint income is above $95,000, but does not exceed $115,000. These income limits increase to $96,000 and $116,000 respectively regarding any contribution made for calendar year 2014.
Alternative Minimum Tax (AMT) is a tax calculation that adds certain tax preference items back into adjusted gross income. Alternative minimum tax (AMT) uses a separate set of rules to calculate taxable income after allowed deductions. Preferential deductions are added back, and then the AMT exemption is subtracted to get the AMT taxable income (AMTI). AMTI is then taxed at the current rate schedule to get tentative minimum tax (TMT). If TMT is higher than the regular tax liability for the year, the regular tax and the amount by which the TMT exceeds the regular tax are paid (i.e. the taxpayer pays the full TMT).
This broadcast serves as reference material for information purposes only; does not constitute an offer to acquire, solicitation for an offer to acquire, an offer to sell or solicitation for an offer to buy, any securities, nor is intended to be relied upon as a forecast, research, or investment advice on any securities, and cannot be used for any of the foregoing.
The views and opinions expressed by the Lord Abbett speaker are those of the speaker as of the date of the broadcast, and do not necessarily represent the views of the firm as a whole. Any such views are subject to change at any time based upon market or other conditions and Lord Abbett disclaims any responsibility to update such views. Neither Lord Abbett nor the Lord Abbett speaker can be responsible for any direct or incidental loss incurred by applying any of the information offered.
The value of investments and any income from them is not guaranteed and may fall as well as rise, and an investor may not get back the amount originally invested. Please consult your investment professional for additional information concerning your specific situation.
This broadcast is the copyright © 2014 of Lord, Abbett & Co. LLC. All Rights Reserved. This recording may not be reproduced in whole or in part or any form without the permission of Lord Abbett. Lord Abbett mutual funds are distributed by Lord Abbett Distributor LLC.
FOR MORE INFORMATION ON ANY LORD ABBETT FUNDS, CONTACT YOUR INVESTMENT PROFESSIONAL OR LORD ABBETT DISTRIBUTOR LLC AT 888-522-2388, OR VISIT US AT WWW.LORDABBETT.COM FOR A PROSPECTUS WHICH CONTAINS IMPORTANT INFORMATION ABOUT A FUND'S INVESTMENT GOALS, SALES CHARGES, EXPENSES AND RISKS THAT AN INVESTOR SHOULD CONSIDER AND READ CAREFULLY BEFORE INVESTING.