On November 4, 2015, myRA retirement accounts became available for investment. President Obama first announced the program, designed to address the retirement savings needs of the estimated 55 million Americans without access to employer sponsored retirement plans, during his 2014 State of the Union address. The administration has spent the past year piloting the program with 60 employers, apparently with positive results, according to Treasury officials.
Below is a review of the myRA program:
- The myRA is a no-fee, non-deductible Roth IRA for individuals with annual earned income below $131,000 if single, head of household, and under $193,000 if married filing jointly.
- There is no minimum investment, contrary to other retirement accounts which typically require a minimum balance.
- Contributions will count against Roth contributions. The contribution limit is $5,500 per year or up to $6,500 if 50 or older at the end of the year. (Limits are for 2015 and may be adjusted for COLA increases.)
- The myRA account holder can withdraw any part of the balance in the account without any penalties. However, anyone who withdraws interest earned before age 59 1/2 will pay taxes on that interest plus a possible penalty, just as with a Roth IRA.
- The myRA can be funded in several ways:
- via direct deposit contributions through employer
- from a federal tax refund into the account
- via ACH from checking or savings accounts, either one-time or recurring (this was added post pilot program)
- Once the account reaches $15,000 in value (or has been in place for 30 years, whichever occurs first) it must be transferred to a Roth IRA at a financial institution, where contributions can continue.
- The investment vehicle for the myRA is an interest bearing account backed by the U.S. Treasury, containing bonds with maturities of 4 years or more, similar to the G Fund in the Thrift Savings Plan available to government workers. The current interest rate is 2.125%.
The myRA.gov enrollment site, operated by Comerica Bank, the financial agent of the Treasury responsible for administering myRA accounts, is now available to those eligible investors who wish to establish a myRA account.