MyRA Savings Accounts

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The MyRA is a new form of introductory retirement account announced by President Obama in 2014 and launched by the US Treasury in 2015. It is a Roth IRA funded by direct deposit and invested in government securities, similar to the Thrift Savings Plan (TSP) "G" Fund.

Summary[edit]

The MyRA now has a homepage on treasury.gov.

This won't really help a contributor to a regular IRA unless they are looking to use an IRA purely as an emergency fund or a high-interest savings account for a first-time home purchase. The lack of a minimum contribution makes it a simple alternative to ETF-based strategies for starting an IRA in the double- or triple-digits; new investors can use it to save up enough to make the leap into e.g. a Vanguard target-date fund-of-index-funds at $1000 while still making a decent (1-3%) rate of return.

The program is not proposed to be rolled out for the self- or un-employed, so it provides no help for graduate students that don't qualify for IRA contributions.

The MyRA is motion in the direction of an "auto-IRA" funded by payroll deductions, but still without the crucial in-unless-you-opt-out provision.

References[edit]

Obama Orders Creation of ‘MyRA’ Savings Accounts
via: http://www.nytimes.com/2014/01/30/your-money/obama-orders-creation-of-myRA-accounts.html

"Making good on a State of the Union address promise, President Obama on Wednesday ordered the creation of new employer-sponsored savings accounts intended to help more people get started saving for retirement."

"The accounts — which are intended for people who do not now have employer-sponsored savings plans — will operate much like Roth I.R.A.’s, according to Treasury officials. Married couples with modified adjusted gross incomes up to $191,000 and individuals earning up to $129,000 will be able to save up to $15,000 total in after-tax dollars for a maximum of 30 years."

"MyRA contributions can be withdrawn tax-free at any time without penalty, though pulling out any earnings will be subject to the same restrictions as the Roth, according to Treasury officials."

"There will be only one investment option: The Treasury will create a security fund modeled after the federal employees’ Thrift Savings Plan Government Securities Investment Fund, which pays a variable rate."

"For the year that ended in December 2012, it had an average annual return of 1.74 percent. It posted an average annual return of 2.69 percent for the five years that ended in December 2012. There are no fees, the Treasury said."

"Savers can keep the same account when they change jobs. Once a saver’s myRA reaches $15,000, or after 30 years, the balance will be rolled over to a private sector retirement account. Account holders also have the option of rolling it over earlier."


My, oh myRA, what a misguided bureaucratic mess this will be
via: http://www.cnbc.com/id/101396252

"So here's the irony: The myRA will actually have the working poor financing the government's deficit spending. By creating accounts that invest in a government pool, it's yet another way for the Treasury to raise funds without having to sell bonds in the public markets."


Opportunity for All: Securing a Dignified Retirement for All Americans
via: http://www.whitehouse.gov/the-press-office/2014/01/28/fact-sheet-opportunity-all-securing-dignified-retirement-all-americans

"Savers have the option of keeping the same account when they change jobs and can roll the balance into a private-sector retirement account at any time. "

"Participants could save up to $15,000, or for a maximum of 30 years, in their accounts before transferring their balance to a private sector Roth IRA."

"Employers that do not provide any employer-sponsored savings plan would be required to connect their employees with a payroll deduction IRA."

"The President has also proposed to limit contributions to tax-preferred savings accounts once balances are about $3.2 million"


The myRA Retirement Account: Your Best Short-Term Savings Choice?
via: http://www.fool.com/investing/general/2014/02/16/the-myra-retirement-account-your-best-short-term-s.aspx

"While myRA is a credible starter retirement account, its benefits as a short-term or home down-payment fund should not be overlooked. Offering guaranteed principal, superior interest rates, and the ability to withdraw principal at any time, the myRA may be the best short-term or emergency fund available for nearly all workers -- not just those without employer-sponsored plans."

"Under the proposal, myRA will be available to singles with adjusted gross incomes up to $129,000 a year and couples with income up to $191,000. Note that eligibility does not guarantee availability, as employers are under no obligation to offer the plan to employees and myRA is not being offered to the self-employed. The rollout of myRA is planned for the end of 2014."

"The bonds will be backed by the U.S. government so that savers can never lose their principal investment. myRA guarantees a savers' principal, which is a necessity for an emergency or short-term savings fund."

"The minimum myRA contribution is only $5 per pay period, but there is a contribution limit of $5,500 per year ($6,500 if over age 50) in accordance with Roth IRA rules. Employees who invest in a myRA account can still fund another Roth IRA but will be subject to the overall limit."

"Also, while a family's adjusted gross income can go up to $191,000 to participate in a myRA or any Roth IRA, a phase-out of the benefit begins at $181,000; for individuals, the limit is $129,000, with the phase-out beginning at $114,000."

"Another limitation of the myRA is that once the account reaches $15,000 or has been in existence for 30 years, it must be converted to a regular Roth IRA. This may inconvenience retirement savers who do not want to make new investment decisions, but it is not as much of a problem for savers using their myRA account as a short-term or emergency fund except that they will have to keep their account balance below $15,000. Once the myRA limit has been reached and the account converted to a regular Roth IRA, participants cannot open a new myRA. However, there is nothing stopping savers from voluntarily transferring some of their myRA contribution to another Roth IRA to maintain their balance below $15,000. The participants could then keep their myRA with its guaranteed principal and higher rate as a short-term savings account."

"Employees saving for their first home would especially benefit from having a myRA account to help save for their down payment. The principal is safe, the return is superior, and the principal -- and, in some situations, the earnings -- can be withdrawn tax-free."


12 things you should know about the myRA
via: http://blogs.marketwatch.com/encore/2014/02/04/12-things-savers-should-know-about-the-myra/

"Individuals can contribute a total of up to $5,500 to all of their IRAs, a category that includes the myRA. As a result, if you were to contribute $3,000 this year to your regular IRA, you could contribute no more than $2,500 to a myRA."

"Participation is voluntary. If you do choose to participate, your employer will set up an automatic payroll deduction that will funnel money directly from your paycheck to your myRA account."


Meet myRA: Obama offers IRA plan details
via: http://blogs.marketwatch.com/encore/2014/01/29/meet-myra-obama-offers-ira-plan-details/?link=instory

"But the proposal took on greater heft as the administration fleshed out the details of the plan on Wednesday: Treasury Department officials briefed reporters on the plans in the morning, and Obama was scheduled to discuss them in the afternoon during a speech at a steel plant in West Mifflin, Pa. (That speech was closed to the public.)"


Shift retirement plans away from employers
via: http://blogs.marketwatch.com/encore/2014/01/29/shift-retirement-plans-away-from-employers/?link=instory