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Lord Abbett Shares Year-End Retirement Checklist

Posted by WrapManager's Investment Policy Committee
December 7, 2017


Review your retirement plans to maximize potential savings for you and your family...

Lord Abbett's 2017 Retirement Tips - Year End Checklist includes important information for anyone who turned age 50 or 70½ in 2017, and for investors  taking required minimum distributions (RMDs). The article also addresses common retirement investing questions such as:

- Can you make IRA contributions if you participate in an employer-sponsored retirement plan?
- What can you do to optimize the tax implications of converting a traditional IRA to a Roth IRA in 2017?
- Did you make a nondeductible (aftertax) IRA contribution? 
- If you are subject to RMDs, have you included the value of all your IRAs in the calculation? 

Continue reading to review some of Lord Abbett's year-end retirement tips, or download the complete checklist and review your retirement plan.

Retirement Tips: 2017 Year-End Checklist

Q. Have you fully funded your IRA?
A. Virtually anyone under the age of 70½ (at the end of 2017) is eligible to fund an IRA; all you need is earned income. Even children or grandparents with reportable earned income may be eligible to make Roth IRA contributions. Individuals generally must have earned income to contribute to both traditional IRAs and Roth IRAs; an exception is a spousal IRA. However, everyone is not eligible to make Roth IRA contributions. Roth IRAs carry statutory maximum income levels, and investors must satisfy an annual income test. There are no maximum age restrictions on Roth contributors, although individuals older than 70½ cannot make contributions to traditional IRAs

Q. Did you turn age 50 in 2017?
A. If you did, you can via a “catch-up” provision, contribute an additional $1,000 to a traditional or Roth IRA; $6,000 to a 401(k), and $3,000 to a SIMPLE IRA. A number of variables apply in determining whether taxpayers’ contributions to their traditional IRA are tax deductible. Variables include filing status, modified adjusted gross income (MAGI), and whether individuals and/or their spouses are active participants in a workplace retirement plan. While it is true that you can wait until April 15, 2018, to contribute your IRA for the 2017 tax year, why not fund it now, if you are able to, and have the money working for you on a tax-favored basis for a longer length of time?

Q. Did you turn 70½ in 2017?
A. If you did, you are required by the IRS to start taking annual required minimum distributions (RMDs) from all IRAs (excluding Roth IRAs). You are, however, permitted to postpone your first RMD until April 1, 2018. But then you must take a second distribution before the end of 2018, and every year thereafter.

Taking two minimum distributions in 2018 may affect your marginal tax rate.

Q. If you are older than age 70½, have you taken your RMD for 2017?
A. Don’t forget that a 50% excise tax is applied to the minimum distribution amount that was required but not taken.

For example, suppose your 2017 minimum distribution is $10,000. The distribution would have to be taken by Friday, December 29, this year, since the 31 falls on a Sunday. But if you mistakenly withdrew only $1,000, a 50% excise tax of $4,500 would be applied to the $9,000 shortfall, plus you would be subject to federal income tax on the $9,000 in the year it is eventually distributed. The penalty tax is reported on IRS Form 5329, “Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts.”

You can always take more than your annual minimum distribution.

Q. Can you make IRA contributions if you participate in an employer-sponsored retirement plan?
A. Yes. Participation in an employer-sponsored plan, such as a 401(k), 403(b), 457(b), SIMPLE, or SEP IRA, does not affect IRA eligibility or contribution limits. However, participation may affect whether or not your contributions are tax deductible.

Q. Are all beneficiary designation forms in order?
A. Individuals often have several retirement accounts (IRAs, 401(k), 403(b), 457, etc.) established at various times across multiple providers. Life events, such as marriage, divorce, newborn, adoption, and death, can change situations and outlooks. Are the correct individual(s) designated to receive the benefits?

IRAs, like most retirement accounts, generally do not pass through probate, so the beneficiary designation on file with an IRA provider, rather than a will, is what prevails.

Learn More About Lord Abbett

For additional retirement investing tips, download the entire retirement checklist, or read Lord Abbett's post about Retirement Plan Limits for 2018

Contact us to learn more about  money managers such as Lord Abbett and Company, LLC,  or to consult with a knowledgeable Wealth Advisor about your retirement plan. Give us a call at 1-800-541-7774 or email us


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