MyRA starter retirement accounts now available nationwide
MyRA, the Obama administration’s free, guaranteed-return starter retirement account, launched nationwide on Wednesday, Bloomberg reported.
The government-backed plan is an option for the tens of millions of U.S. workers whose employers don’t offer a retirement savings plan. MyRA accounts, which will invest only in a U.S. Treasury security guaranteed never to lose value, are open to anyone earning an annual salary of less than $131,000, or $193,000 if they are married and filing taxes jointly.
Savers can put away up to $5,500 a year, and those who are at least 50 by year’s end can contribute as much as $6,500. The guaranteed return lasts until they accumulate $15,000 in the plan or have been in MyRA for 30 years, when they will need to move their money into a private-sector product such as a Roth IRA.
A MyRA (My Retirement Account) won’t return nearly what a stock fund is likely to return over time, but there’s no risk of workers losing their nest egg. Users can access the money for emergencies. It operates much like a 401(k), but is basically a Roth IRA with contributions of after-tax money that can be withdrawn tax-free in retirement.
The myRA.gov website notes that “interest earned is the same rate as investments in the Government Securities Fund, which earned an average annual return of 3.19 percent over the 10-year period ending December 2014.”
Over the past five years, that rate has dropped to a little over 2 percent, said Richard Ludlow, executive director of the MyRA program. He added that “the rate is dramatically higher than what people are able to earn on savings accounts.”
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