Archive for 'April 2015'

    Know Your RMD Rules

    April 30, 2015 1:55 PM by Brian Dobbis

    Different rules apply to IRAs and 401(k) plans when it comes to taking required minimum distributions. Investors and their advisors should know the difference.


    The federal government requires that, upon turning 70½ years old, individuals who own IRAs must commence taking minimum distributions, regardless of whether or not they are still working. Roth IRAs are the lone exception, because they have no minimum distribution requirements. 

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    Clearing the Air on Active Share

    April 27, 2015 5:00 PM by Lord Abbett Editorial Staff

    The investing public is coming to a deeper understanding of this new measure.

    After several years of hype surrounding the concept of active share, consultants have begun telling their institutional clients not to expect funds that score high on the measure to necessarily outperform their benchmarks, according to a recent article in the industry newsletter FundFire (“Active Share May Be Overhyped with Institutional Investors,” April 22, 2015). 

    The hype has reached the point that some institutional investors are considering only funds that exceed minimum levels of active share, FundFire reported. 

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    A Pre-Fed Reality Check

    April 27, 2015 4:07 PM by Timothy Paulson

    As U.S. policymakers prepare to meet on April 28–29, here’s a status report for key asset classes.

    With U.S. Federal Reserve policymakers set to meet on April 28–29, we thought it would be a good time to take the temperature of key asset classes as the world awaits more clues about a potential “liftoff” in U.S. interest rates sometime in 2015. (In a follow-up post, we’ll look at how Lord Abbett is positioning its fixed-income portfolios in the current environment.)

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    What Happens to Employees' Retirement Funds When They Leave?

    April 23, 2015 4:45 PM by Brian Dobbis

    Workers with employer-sponsored retirement plans have decisions to make about their assets when they leave their jobs. One option—rolling them over into an IRA—offers potentially attractive benefits.


    Typically, when workers leave their job, whether by choice or otherwise, they pack up their desks in the ubiquitous cardboard box, making sure not to leave any personal effects behind. But in the flurry of departure, they may forget their most valuable personal asset—one that cannot fit in a box—their retirement fund

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    Taking Retirement Withdrawals Before 59 1/2 Without Penalty

    April 16, 2015 5:10 PM by Brian Dobbis

    In general, individuals who start taking distributions before 59½ face a 10% penalty, but there are exceptions that may eliminate the early-withdrawal fine.


    Investors who have tax-favored retirement accounts should know that 59½ and 70½ are key ages for investors, who may and must take distributions from their accounts.

    Generally, upon reaching age 70½, investors are required to withdraw a mandated minimum distribution from their 401(k) or IRA. However, individuals may be able to take withdrawals as early as 59½ without being assessed the 10% early-withdrawal penalty, under certain exceptions as established by IRS Section 72(t). While the rules may be confusing on some aspects, they are clear that distributions must be made on or after the date the investor reaches age 59½.

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    Financial Stocks: The Good, the Bad, and the Ugly

    April 16, 2015 2:30 PM by Greg Wachsman

    Skittish about the financial sector? For all the headlines about big banks' legal troubles, investment opportunities can still be found in super-regional banks. 

    In the middle of difficulty lies opportunity, Albert Einstein once said. That thought certainly resonated in a recent presentation I gave on the financial services sector, which arguably has endured more negative publicity in recent years than it did during the Great Depression. 

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    Are Cable Companies Doomed?

    April 14, 2015 12:10 PM by So Young Lee

    More people may "cut the cord" now that HBO is offering a standalone streaming service, and others are on the way. But the strongest pay-tv providers should not just survive, but thrive.

    As a research analyst covering media, Internet, and cable companies, I am fascinated by the number of consumers who would gladly end their cable subscriptions if they could receive their favorite programming a la carte at a lower price—or avoid cable altogether. With the recent introduction of HBO Now and digital distributors offering slimmer content bundles at less than half the rate of cable, some industry watchers have suggested it marks the beginning of the end of cable TV as we know it.

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    IRAs May Be the Way

    April 10, 2015 11:00 AM by Brian Dobbis

    IRAs are widely available and easily established. But their complicated rules may render them inaccessible to the very people they were intended to help. We try to simplify.


    Forty years after the creation of individual retirement accounts as a way to encourage people to save for retirement, IRAs have grown into a $7.4 trillion market, representing an estimated 30% of all U.S. household retirement assets, which makes them the largest single component of the U.S. retirement market. IRA assets are expected to approach $9 trillion by 2018, according to the Investment Company Institute (ICI)—with good reason.

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