It is desirable that the translator should read Appendix F in Volume III of The Lord of the Rings and follow the theory there set out. In the original text English represents the Common Speech of the supposed period. Names that are given in modern English therefore represent names in the Common Speech, often but not always being translations of older names in other languages, especially Sindarin (Grey-elven). The language of translation now replaces English as the equivalent of the Common Speech; the names in English form should therefore be translated into the other language according to their meaning (as closely as possible).

Baggins. Intended to recall 'bag'—compare Bilbo's conversation with Smaug in The Hobbit -- and meant to be associated (by hobbits) with Bag End (that is, the end of a 'bag' or 'pudding bag' = cul-de-sac), the local name for Bilbo's house. (It was the local name for my aunt's farm in Worcestershire, which was at the end of a lane leading to it and no further). Compare also Sackville-Baggins. The translation should contain an element meaning 'sack, bag'/.

J.R.R. Tolkien, Nomenclature of The Lord of the Rings