There are millions of workers in America who either don’t have access to an employer-sponsored retirement plan or lack options to save for retirement. In some cases, they don’t have enough money saved to meet a minimum for opening an investment account. The United States Treasury developed myRA to address some of these common barriers to retirement saving and to provide a retirement savings option that is simple, safe, and affordable for savers. myRA is not a replacement for 401(k)s or other types of employer-sponsored retirement savings accounts.
The U.S. Department of the Treasury has developed myRA (my Retirement Account), a retirement savings account with a new type of Roth IRA* investment that makes saving for retirement simple, safe, and affordable. Individuals can open a myRA account with no start-up cost and there are no fees for the maintenance of the account. myRA has no minimum contribution requirement, so savers can contribute the amount that best fits their budget.* The investment in a myRA is backed by the United States Treasury and the account carries no risk of losing money.
myRA is for anyone who wants a simple, safe, and affordable way to start saving for retirement. It is a good option for people without access to employer-sponsored retirement savings plans. Because myRA follows Roth IRA* rules, savers (or their spouses, if married filing jointly) must have taxable compensation to be eligible to contribute to a myRA account. This is available to any worker including those who would like to supplement an existing 401(k) plan. There is an income limit for eligibility, generally must earn an annual income of less than $129,000 for individuals, and $191,000 for married couples filing jointly.
myRA is considered a Roth IRA. Total traditional and Roth IRA contributions are limited for 2015 to the following:
- $5,500 ($6,500 if you’re age 50 or older), or
- your taxable compensation for the year, if your compensation was less than this dollar limit
Contributions to myRA accounts are invested in a new United States Treasury security, which safely earns interest at the same variable rate as investments in the government securities fund for federal employees. This fund has had an average annual return of 3.39% over the ten-year period from December 2003 to December 2013.
Savers can contribute to their myRA accounts as little as a few dollars a month up to $5,500 per year (or $6,500 per year for individuals who will be 50 years of age or older at the end of the year).* The myRA account can have a maximum balance of $15,000 or a lower balance for up to 30 years, When either of these limits is reached, savings will have to be rolled over (transferred) into a private-sector Roth IRA. A rollover to the private sector allows savers to continue to grow their savings past the maturity of their myRA starter savings account. Savers can choose to roll over their account balance into a private-sector Roth IRA at any time. More information will be provided to myRA account holders about rollover to the private sector in the future Currently, savers can fund their myRA accounts from their paychecks, as long as their employer offers direct deposit and is able to direct a portion of the paycheck to the myRA account. Additional methods to contribute to myRA accounts will become available soon.
myRA accounts belong to the individuals creating the accounts and are not associated with any employer. This way savers can continue to use the same myRA account even if they move to a new job. They just need to set up direct deposit with the new employer. And if savers have more than one job, they can request contributions to be set up through each employer.
For more information please email or call Brenda Reynolds at 847-695-2700 or Brenda.Reynolds@tkocpa.com, or visit myra.treasury.gov.