Treasury's myRA To Debut in Late 2014: New Retirement Savings Program Will Provide Safe, No-Fee Starter Accounts

• No minimum contribution to open an account; ongoing elections of any amount each payday
• No fees to employers or employees for account setup or maintenance
• Low risk: Account will never lose value, and accounts are backed by the Treasury
• Earns the same variable interest rate as a low-risk investment option available to federal government employees
• Accounts are portable; they’re not tied to a single employer
• Employees build savings for 30 years or $15,000, then roll over the funds to a private-sector retirement account, or roll over to private-sector provider at any time
• Employee contributions can be withdrawn tax-free anytime; earnings can be withdrawn tax-free after five years and the saver is 59½

Flexible Features Promote Long-Term Savings, Offer Short-Term Flexibility

The myRA program will follow Roth IRA rules and offer the same tax advantages as those accounts. Like Roth IRAs, the employee contribution portion of the invested funds can be withdrawn tax-free at any time, with no penalties.

“The flexibility of myRAs should be very attractive to low-income families,” said Ray Boshara, senior adviser and director of the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis. “These starter accounts provide a low-cost, safe way for individuals to start saving for retirement while retaining the ability to use their funds for emergency savings or other needs while they do so.”

According to some industry analysts, the flexible features of the myRA program could have a notable impact on the retirement readiness of a portion of American employees by filling a gap in financial products available to build long-term retirement savings. Many believe that the easy on-ramp to long-term savings that is provided through the program, coupled with the flexibility offered for liquid assets, are two important features toward spurring adoption and financial stability among a specific segment of eligible employees.

Eligibility and Sign-Up Process

Designed for savers who do not have access to an employer-sponsored retirement savings plan, the myRA program will not only be available to full-time employees, but also to part-time and contract workers. Eligible employees will have an individual annual income of less than $129,000, or a combined annual income of less than $191,000 for a couple.

Initially, participating employers will make myRA information available to their employees. Once the accounts are available, employees will be able to enroll in the program via direct deposit, with no minimum contribution to start. An employee can then elect to have a portion of each paycheck—the amount determined by the employee— automatically deposited into a myRA account. Employees who change jobs can continue to add savings to an existing myRA account by setting up deposits through any employer that offers payroll direct deposit. Those with multiple jobs will be able to use direct deposit from each paycheck to contribute to a single myRA.

Employer rollout is expected to begin in 2014, with expanded rollouts in 2015. For additional information, visit www.treasurydirect.gov/readysavegrow or www.myra.treasury.gov, or call 844-284-2676.

FIGURE 1

myRA: My Retirement Account

What will it be?
	myRA will have no cost to open, no fees, and will never go down in value. Individuals will be able to contribute to their accounts every payday.
	Expected to begin rolling out in late 2014.
Who will it be for?
	American workers who want to start saving for retirement.
	Employers who want to make a retirement savings program available to their employees with a simple, one-time setup. Employers will have no fiduciary responsibilities.

Graphics courtesy U.S. Treasury. See the full infographic here [PDF].

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