Did the IRA contribution limits change for 2015?
In 2015, an individual may contribute up to $5,500 in an IRA, plus a catch-up contribution of $1,000 for those individuals age 50 and older.
Did the income eligiblity requirement For a Roth IRA change for 2015?
Yes. Please see below to determine if you income qualify.
In 2014 single individuals can make a full Roth IRA contribution when income is $114,000 or less ($116,000 or less for the 2015 year). A partial contribution is allowed if income is greater than $114,000, but not more than $129,000 ($116,000, but not more than $131,000 in 2015).
Married (filing jointly):
In 2014 couples filing jointly can make a full Roth IRA contribution if their modified adjusted gross income (MAGI) is $181,000 or less ($183,000 in 2015). A partial contribution is allowed if income is greater than $181,000, but not more than $191,000 ($183,000, but not more than $193,000 in 2015).
Married (filing separately):
In 2014 and 2015, couples that file separately are ineligible to make a Roth IRA contribution if their MAGI is 10,000 or more.
Which required minimum distribution rules apply to IRAs?
An IRA account is required to begin receiving required minimum distributions (RMDs) l by April 1 of the calendar year following the year they reach age 70½. An account must then continue to receive RMDs annually, by December 31. Two minimum distributions will be required in the first year if the individual defers until the calendar year following 70½ to take their initial RMD. To avoid taking two RMDs in the same year, the individual would need to take his/her first RMD by December 31 of the year he/she turns 70½.
A 50% excise tax is assessed on the amount of the RMD not taken.
What determines whether a Traditional IRA contribution is tax deductible?
Traditional IRA contributions may be partially, fully, or non-tax-deductible, depending on a number of factors, including household income, marital and tax filing status, and active participation in a workplace retirement plan (e.g. 401(k)).
What does an account owner need be aware of when making nondeductible (aftertax) contributions to a traditional IRA?
Generally, it’s the IRA account owner’s responsibility to track the amount of aftertax dollars (basis) in all their IRAs. This is done by filing IRS Form 8606. Failure to file Form 8606 likely will result in double taxation.
What is the Saver’s Tax Credit?
An individual may be eligible to receive a tax credit for funding a traditional or Roth IRA. The Saver’s Credit is a nonrefundable, federal income tax credit available to taxpayers with an adjusted gross income (AGI) of less than $61,000. The maximum annual contribution eligible for the credit is $2,000, and the maximum credit is 50%, making the maximum credit $1,000.
2015 Saver’s Credit Eligibility
Tax Filing Status*
50% of Contribution
20% of Contribution
10% of Contribution
Ineligible for Credit
Married Filing Jointly
Not to exceed $36,500
$39,501 – $61,000
Greater than $61,000
Head of Household
Not to exceed $27,375
Greater than $47,750
Not to exceed $18,250
Greater than $30,500
*Income based on adjusted gross income (AGI)
Can a minor contribute to an IRA?
A minor is eligible to establish and contribute to an IRA if he/she has reportable earned income. See here for more information.
What impact does charitable giving have on IRA distributions?
The provision allows individuals 70½ or older to make a qualified charitable distribution (QCD) up to $100,000 from their traditional IRA or inactive SEP-IRA, and then have the proceeds sent directly to a registered charity. The charitable donation is not considered income or a deduction, but may be used to offset all or a part of an individual's 2014 RMD. QCDs do not apply to employer-sponsored plans (e.g. 401(k)).
What are the eligibility requirements to convert a Traditional IRA to a Roth IRA?
All individuals, regardless of income or age, are eligible for a Roth conversion. For more information on Roth conversions, see our "Roth Frequently Asked Questions" flyer.
How do I open a Lord Abbett IRA?
Please complete our IRA application.
How do I transfer my former employer’s workplace retirement plan or an IRA to a Lord Abbett IRA?
Assets may be sent directly to Lord Abbett from a 401(k), profit-sharing, 403(b), governmental 457(b), or another IRA.
When an individual retires or leaves his/her place of employment, the former employer is required to give an individual the option of having his/her eligible rollover distribution transferred directly to a Lord Abbett IRA or another workplace retirement plan.
To transfer a 401(k) or another workplace retirement plan to a Lord Abbett IRA, please follow these steps:
- Complete a Lord Abbett IRA application.
- Instruct your former employer to make a check payable to “Lord Abbett Funds, IRA [Your Name].” Include your social security number, newly assigned IRA account number, and the words “direct rollover” on the check. The check can be sent to you or forwarded directly to Lord Abbett.
- If you are a non-spouse beneficiary, you may transfer an account in a “Decedent IRA” The account would be titled, “John Doe, deceased, FBO: John’s beneficiary. The asset transfer must come directly to Lord Abbett from the prior account.
An IRA transfer occurs when an individual moves his/her IRA from an institution to another. The individual also may have the funds sent to Lord Abbett directly fromhis/her prior IRA custodian. If the individual takes receipt of the assets, he/she generally has *60 days to deposit the funds into a new IRA or be subject taxation and a potential penalty.
To transfer a 401(k) or another workplace retirement plan to a Lord Abbett IRA, please follow these steps:For more information, please call our team of IRAs specialists at 888-522-2388 with questions.
What additional IRA resources does Lord Abbett offer?
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.
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.
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.
Please note: Minimum distributions must be taken from traditional IRAs by April 1 following the year that a person turns 70½. A minimum distribution must be taken from the IRA in each subsequent year. Failure to take the required minimum distribution will result in a 50 percent penalty on the amount that was not distributed. Mandatory distributions that represent deductible contributions and all earnings are taxed as ordinary income. Mandatory distributions based on nondeductible contributions are tax-free.
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.
SEP-IRA is an acronym which stands for a Simplified Employer Pension Plan whose investments are placed in IRA accounts selected by each participant. All contributions generally equal the same percentage of an eligible employee’s pay (maximum 25%) and are made by the employer.
A SIMPLE IRA plan is an IRA-based plan that gives small business employers a simplified method to make contributions toward their employees’ retirement and their own retirement. Under a SIMPLE IRA plan, employees may choose to make salary reduction contributions and the employer makes matching or non-elective contributions. All contributions are made directly to an Individual Retirement Account (IRA) set up for each employee (a SIMPLE IRA). SIMPLE IRA plans are maintained on a calendar-year basis.
Combining and consolidating assets in an IRA rollover may involve administrative fees and other charges.
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 2014 or any year afterward. Fund level fees and expenses are still applicable. Please see the current prospectus.
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.
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April 14, 2015
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