Image alt tag

Error!

There was a problem contacting the server. Please try after sometime.

Sorry, we are unable to process your request.

Error!

We're sorry, but the Insights and Intelligence Tool is temporarily unavailable

If this problem persists, or if you need immediate assistance, please contact Customer Service at 1-888-522-2388.

Error!

We're sorry, but the Literature Center checkout function is temporarily unavailable.

If this problem persists, or if you need immediate assistance, please contact Customer Service at 1-888-522-2388.

Tracked Funds

You have 0 funds on your mutual fund watch list.

Begin by selecting funds to create a personalized watch list.

(as of 12/05/2015)

Pending Orders

You have 0 items in your cart.

Subscribe and order forms, fact sheets, presentations, and other documents that can help advisers grow their business.

Reset Your Password

Financial Professionals*

Your password must be a minimum of characters.

Confirmation Message

Your LordAbbett.com password was successully updated. This page will be refreshed after 3 seconds.

OK

 

Rollover IRA

Lord Abbett makes it easy to open a Rollover IRA. Anyone receiving a distribution from a former employer’s workplace retirement plan is eligible to set up a Rollover IRA. Find out more about Lord Abbett’s no custodial fee rollover IRA.

Overview

Overview

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 Rollover IRA?

When an individual retires or severs service, his or her former employer is required to provide all available distribution options. One available option is a tax-free transfer to a Rollover IRA.

How does a Rollover IRA work?

Follow these steps to start the rollover process:

  1. Contact your former employer about any necessary paperwork. Request the check be made payable to: “Lord Abbett Family of Funds” For Benefit Of: [your name]. To ensure a seamless rollover, the newly established Lord Abbett IRA account number and “Direct Rollover” should appear on the check.
  2. Complete a Lord Abbett IRA Application and Transfer Form.


Practice Tip: Individuals that are married, depending on plan type and or its provisions, the spouse may need to sign a consent form allowing for the rollover distribution. 

Rollover Options: Direct versus Indirect

A rollover can be completed as either a direct or indirect rollover. 

DIRECT ROLLOVER:

Proceeds from your former employer’s workplace retirement plan are transferred directly to a Lord Abbett Rollover IRA.  A direct rollover is a tax-free transfer of assets. 

INDIRECT ROLLOVER:

Here, the funds from a former employer’s workplace retirement plan are sent directly to the investor. 

An indirect rollover requires a mandatory 20% federal tax withholding on the entire taxable portion of the distribution. The investor then has 60 days from receipt of the funds to move the assets into a Rollover IRA. A rollover not completed within the allotted 60-day period is subject to taxation on the total taxable distributed amount and a 10% early withdrawal penalty if the account owner under is under 59½ and an exception does not apply.

Who should consider a Rollover IRA?

  • Individuals eligible to receive a distribution from a former employer’s workplace retirement plan
  • Individuals that are retiring or changing places of employment and want to keep their retirement funds in a tax-deferred1 account
  • Individuals seeking a more diverse selection of investment options 
  • Individuals wishing to consolidate their retirement accounts into a single account


What benefits does an IRA Rollover offer?

 

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

Note: Be careful if your client has a participant loan at the time of distribution. Generally, unless the plan has provisions to the contrary, the outstanding loan balance will become taxable income, if it is not repaid before transferring the former employer's plan account as rolling over a plan loan is not permitted in an IRA.

Diversification does not guarantee a profit or protect against loss in declining markets.

An IRA rollover may involve the application of fees and charges to the investor.

EASY_IRA_Banner_v1
saving rolling

Eligibility

Eligibility

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.

Who is eligible to open a Rollover IRA?

An individual that separates from service or retires is generally eligible to move assets from their former employer’s workplace retirement to plan into a Rollover IRA.

Are there any types of distributions that are ineligible to be moved to a Rollover IRA?

Only Eligible Rollover Distributions from a workplace retirement plan can be moved to a Rollover IRA.

Here are a few types of distributions that are ineligible to be rolled over including:


What type of workplace retirement accounts are eligible to be moved into a Rollover IRA?

Our flyer shows which accounts are eligible for a rollover.

Open an IRA

  1. Complete the writable IRA Application

  2. Print and send to Lord Abbett by mail, fax, email or use our Free FedEx shipping option

  3. You’ll receive a confirmation once your IRA is established

Contributions

Contributions

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 are the Rollover IRA contribution limits?

Rollover IRAs are designed to receive funds from a former employer’s workplace retirement plan avoiding current taxation. The dollar amount a rollover IRA may receive is equal to the retirement funds available from an individual’s former employer's plan. 

Do IRA Rollovers affect annual IRA contribution limits?

No. A rollover to an IRA does not affect an investor’s annual IRA contribution limit.

Additional IRA contributions are permitted

Can I combine a Rollover IRA and a Contributory IRA?

Yes. However, you are required to keep traditional IRA and Roth IRA funds in separate accounts.

Practice Tip: An advantage to separating a Rollover IRA from a Contributory IRA occurs should an investor need to declare bankruptcy.

Distributions

Distributions

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 types of distributions can be taken from a Rollover IRA?

There are a number of different kinds of distributions that can be taken from a Rollover IRA. We discuss each distribution type below.

  • Normal
  • Premature (without an exception)
  • Premature (with an exception)
  • Required Minimum Distribution (RMD)
  • Distribution due to death


What is a normal distribution from a Rollover IRA?

A normal distribution occurs after the account owner attains age 59½. A normal distribution is generally subject to taxation in the year withdrawn (unless the withdrawal includes aftertax dollars) but the 10% early withdrawal penalty tax does not apply.

What is a premature distribution (without an exception)?

A premature distribution (without an exception) occurs upon the account owner withdrawing funds before age 59½ and none of the statutory exceptions apply. A premature distribution is both taxable and subject to a 10% early withdrawal penalty tax.

What is a premature distribution (with an exception)?

A premature distribution (with an exception) from a Rollover IRA occurs upon the account owner withdrawing funds before age 59½ and having the distribution satisfy an exception. A premature distribution (with an exception) is subject to taxation but the 10% early withdrawal penalty tax does not apply.

Common exceptions to the 10% additional tax on early withdrawals are:

  • Substantially equal periodic payments (“72(t)”) 
  • Disability
  • Death
  • Qualified higher education expenses
  • Pay for health insurance premiums after receiving unemployment for more than 12 weeks
  • Unreimbursed medical expenses (greater than 7.5% of adjusted gross income). 
  • First-time home purchase (subject to a lifetime limit of $10,000) 
  • IRS Levy


What is a required minimum distribution (RMD) from a Rollover IRA?

A Rollover IRA account owner is required to take a minimum distribution the year he or she turns age 70½. The minimum distribution rules permit the initial or first minimum distribution to be deferred1 until April 1st of the following year. Delaying a required minimum distribution requires the account owner to take two RMDs the following year.

Example:  Jim turns 70½ in 2018. He can either take his RMD in 2018 or delay it until April 1st 2019. Assuming Jim elects to delay his 2018 RMD he is required to take two RMDs in 2019. His 2018 deferred RMD and 2019 RMD. All subsequent RMDs must be taken by December 31st

If the full RMD is not taken in a given year, a 50% excess tax is assessed on the amount not taken. See our calculator to determine your annual RMD amount.

What death benefits are available from a Rollover IRA?

When an IRA account owner dies, an inherited or beneficial IRA is created. However, inherited IRA treatment differs depending on who inherits the account. A Rollover IRA inherited by a surviving spouse differs from a non-spouse beneficiary.

Spousal beneficiary:

Spousal beneficiary has the following options available upon inheriting an IRA:

  • Treat the account as your own
  • Rollover the IRA into your own IRA
  • Transfer the IRA to an employer sponsored plan that you're a participant
  • Remain a beneficiary.


Non-Spouse Beneficiary

Inheriting an IRA from someone other than a spouse provides more limited options. 

A non-spouse beneficiary has the following options available upon inheriting an IRA:

  • Liquidate the entire account
  • Make withdrawals equaling the entire account value by the end of the fifth calendar year following the account owners death
  • “Stretch” the withdrawals over the beneficiary's life expectancy


What is a Stretch IRA?

A Stretch IRA is a distribution strategy available to an IRA beneficiary. The beneficiary “stretches” withdrawals over the beneficiary’s life expectancy.

Click here for more information on our Stretch IRA.

We also offer a calculator to assist in providing you minimum payout amounts.

 

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

Risks Involving the Stretch IRA Strategy:

Withdrawals by the account holder or beneficiaries in excess of the required minimum distribution (RMD) will exhaust the account at a faster pace, reducing or eliminating the effectiveness of the stretch strategy. Distributions greater than the RMD could subject the payment to higher federal and, possibly, state income taxes. When investing assets, which will be used to stretch IRA payments, the investor must be cognizant of any front-end or back-end sales charges that can reduce the assets available. During an extended period of declining investment returns, investors will experience income fluctuations that may cause additional withdrawals to be made that will exhaust the account at a more rapid rate. There can be no guarantee that a Stretch IRA strategy will be advantageous to your specific situation, and many of its benefits are based on current tax laws, which are subject to change. If these laws change, an investor's ability to maintain estimated distributions may be affected. Lengthy distribution periods, much like those involved in a Stretch IRA, expose an investor to significant market risk.

Please confirm your literature shipping address

Please review the address information below and make any necessary changes.

All literature orders will be shipped to the address that you enter below. This information can be edited at any time.

Current Literature Shipping Address

* Required field