Did the IRA contribution limits change for 2016?
No. In 2016, 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 Roth IRA income eligible requirement change for 2016?
Yes. Please see below to determine if you income qualify.
In 2015, single individuals can make a full Roth IRA contribution when income is $116,000 or less ($117,000 or less in 2016). A partial contribution is allowed if income is greater than $116,000 but not more than $131,000 ($117,000—$132,000 in 2016).
Married (filing jointly):
In 2015, couples filing jointly can make a full Roth IRA contribution if their MAGI $183,000 or less ($184,000 in 2016). A partial contribution is allowed if income is greater than $183,000 but not more than $193,000 ($184,000—$194,000 in 2016).
Married (filing separately):
In 2015 and 2016, couples that file separately are ineligible to make a Roth IRA contribution if their MAGI is $10,000 or more.
What minimum distribution rules apply to IRAs?
An IRA account holder is required to begin receiving required minimum distributions (RMDs) by April 1 of the calendar year following the year they reach age 70½. An account holder must then continue to receive RMDs annually, by December 31. Two minimum distributions will be required in the first year if the individual defers taking his or her initial RMD until the calendar year following the year in which he or she reaches age 70½. To avoid taking two RMDs in the same year the individual would need to take his or her first RMD by December 31 of the year he or she turns 70½.
A 50% excise tax is assessed on the amount of any RMD not taken.
What determines if your 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 (i.e. 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 IRS Form 8606, “Nondeductible IRAs” will likely result in double taxation.
What is the Saver’s Tax Credit?
You may be eligible to receive a tax credit for funding your traditional or Roth IRA. The Saver’s Credit is a nonrefundable federal income tax credit available to taxpayers with adjusted gross income (AGI) less than $61,500 for couples filing jointly (for other filers, please see table below). The maximum annual contribution eligible for the credit is $2,000, and the maximum credit is 50%, making the maximum credit $1,000.
2016 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 $37,000
$37,001 – 40,000
$40,000 – $61,500
Greater than $61,500
Head of Household
Not to exceed $27,750
$27,751 – $30,000
$30,001 – 46,125
Greater than $46,125
Not to exceed $18,500
$20,001 – $30,750
Greater than $30,750
*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 or she has reportable earned income. See here for more information.
What impact does charitable giving have on IRA distributions?
The provision first permitted in 2006 allowing individuals 70½ or older to make a qualified charitable distribution (QCD) up to $100,000 from their traditional IRA or inactive SEP IRA and have the proceeds sent directly to a registered charity has been made permanent. The charitable donation is neither income nor a deduction but may be used to offset all or part of an investor's required minimum distribution. QCDs do not apply to employer sponsored plans (i.e. 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. For more information, please contact 888-522-2388.
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 or her place of employment, the former employer is required to give an individual the option of having his or 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:
1. Complete a Lord Abbett IRA Application.
2. Instruct the former employer to make a check payable to “Lord Abbett Funds, IRA [Investors Name].” Include the social security number, newly assigned IRA account number, and the words “direct rollover” on the check. The check can be sent to the investor or forwarded directly to Lord Abbett.
3. If the investor is a non-spouse beneficiary, he or she 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 investor moves his or her IRA from one institution to another. The investor also may have the funds sent to Lord Abbett directly from his or her prior IRA custodian. If he or she takes receipt of the assets, the investor generally has 60 days to deposit the funds into a new IRA or be subject taxation and a potential penalty.
1. Complete Lord Abbett's IRA Application.
2. Complete Lord Abbett’s IRA Transfer Application.
For more information, or if you have any questions, please call our team of IRA Specialists at 888-522-2388.
What additional IRA resources does Lord Abbett offer?
We offer a number of retirement resources including:
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.
A 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.
A 403(b) is a retirement plan for certain employees of public schools and tax-exempt organizations and certain ministers. Generally, retirement income accounts can invest in either annuities or mutual funds. Also known as a tax-sheltered annuity (TSA) plan.
A 457(b) is a nonqualified, deferred-compensation plan established by state and local governments, tax-exempt governments, and tax-exempt employers. Eligible employees are allowed to make salary deferral contributions to the 457 plan. Earnings grow on a tax-deferred basis, and contributions are not taxed until the assets are distributed from the plan.
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 2016 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.