Created just a few years ago in 2014, the My Retirement Account (myRA) program will end, according to the U.S. Department of the Treasury. As part of the Trump Administration's effort to slim down wasteful spending where possible, the Treasury has decided this short-lived Roth IRA backed by the government isn't cost effective.
In 2014, myRAs became available through employers, backed and administered by the U.S. government. MyRAs were described as being simple, safe and affordable starter savings accounts to help low-and moderate-income taxpayers save for retirement. Based on a directive from then-President Obama, the Treasury introduced the myRA program.
A myRA is a Roth IRA authorized to hold only one type of investment, that is, a U.S. Treasury security which earns interest at the same variable rate as investments in the government securities fund for federal employees. The same rules that apply to private Roth IRAs also apply to myRAs, including the MAGI-based eligibility for contributions, maximum annual contributions and tax treatment of distributions.
MyRA participants have been permitted to save up to $15,000, or for a maximum of 30 years, in a myRA account. When either of these limits is reached, the account must be rolled over to a private sector Roth IRA. This rollover allows savers to continue to grow their savings past the maturity of their myRA starter savings account.
The Retirement Account Will Retire
A recent review of the overall success of the myRA program shows that while demand for – and investment in – these accounts has been extremely low, the cost to taxpayers for managing the accounts has been nearly $70 million. On that basis, the Treasury announced on July 28th that the myRA program will phase out over the coming months.
As a result, new enrollments are no longer being accepted. At this time, existing myRAs remain open and accessible, and individuals can continue to manage their accounts until further notice. Individuals can make deposits and their accounts will continue to earn interest. Funds in myRAs remain in an investment issued by the Treasury Department.
Participants are encouraged to visit https://www.myRA.gov or call their myRA customer support numbers if they have questions. Notices from the Treasury Department will be going out to account owners, detailing the coming changes and providing the necessary information on the next steps account owners should take and relevant deadlines for the transfer and closure of their accounts.
U.S. Treasurer Jovita Carranza, sought to assure accountholders, saying "[w]e will be communicating frequently with participants to help facilitate a smooth transition to other investment opportunities." She added that ample private sector investments exist that offer no account maintenance fees, no minimum balances and safe investment opportunities.
A better alternative: our "15 for Life" platform.
- Guaranteed earnings at 4% and more
- Cash growth + Death benefit + Long-term Care benefit in one plan
- Available at any age without penalty
- Not subject to federal taxes
Call us to see how 15 for Life fits you: 847-362-8888.