What is a myRA Retirement Plan?

By | February 18, 2015

The My Retirement Account program, and this is the newest retirement plan offering that was outlined by President Obama in the State of the Union address this year. The Department of the Treasury will develop myRA. This will not be an IRS production, per se. The myRA offers a retirement savings account for someone looking for a simple, safe and affordable way to start saving. These accounts will target the millions of low- and middle-income Americans who don’t currently have access to an employer-sponsored retirement plan.


When was myRA created?

myRA is a simple, safe and affordable retirement account created by the United States Department of the Treasury for the millions of Americans who face barriers to saving for retirement. Some of the numbers from Treasury tell us that half of all workers and 75 percent of part-time workers do not have access to an employer-sponsored retirement plan. It’s anticipated that beginning later this year, savers will be able to open up an account with as little as $25.00 and contribute $5.00 or more every payday. myRAs will be initially offered through employers. Contributions are to be forwarded by the employer to the employee’s myRA each payday. That’s a detail to be further explained by Treasury, the details on how that’ll work.


What benefits are in the myRA retirement plan?

Income limits to be eligible to take advantage of a myRA are the same as for a Roth IRA. For the year 2014, the phase-out limits for Roth IRAs begin at $114,000 for single filers and $181,000 for married filers. These accounts will hold a new retirement savings bond that is backed by the U.S. Treasury. myRAs will earn interest at the same variable rate as the G Fund, that’s the fund found in the federal employees’ Thrift Savings Plan. This fund earns about the same rate as a 30-year bond rate. There are no fees, and there is no risk of loss in your account.


myRA is like a Roth IRA

A myRA acts much like a Roth IRA. Since these are after-tax contributions, the contributions can be withdrawn tax-free at any time. Earnings on the contributions can be withdrawn tax-free after the account is five years old and the saver is age 59½. Earning that are moved prior to five years and age 59½ will be subject to the 10-percent early distribution tax. The account can be transferred at any time to a private-sector account. After 30 years or when their account reaches $15,000, the balance will transfer to a private-sector Roth IRA. What we’re trying to do here is get people to a place where they can save with convenience and ease, and we’re trying to accommodate the small business employers in making it easy.


Employer Tax Credit for myRA Account

In fact, the plan is that the employer will get a small tax credit for its troubles. It’s not a heavy lift for employers, they’re kind of like a go between, but it is something else for their to-do list that they have to get done, so they’re going to provide a small tax credit. There are many details that Treasury is still working out on this.