The Treasury Department announced Wednesday the official national launch of the Obama administration’s myRA, a retirement savings account for Americans that don’t have access to a retirement savings plan at work.
Treasury Secretary Jacob Lew said in announcing the program, which had been in a pilot phase, that “myRA is designed to remove common barriers to saving, and give people an easy way to get started.” MyRA, he said, “has no fees, no risk of losing money and no minimum balance or contribution requirements. To make saving easier than ever, you can now put savings into my myRA RA directly from your bank account.”
MyRA holders can add to the accounts via automatic payroll deduction, one-time or recurring payments from a checking or savings account, or by contributing all or part of a federal tax refund.
Since myRAs are considered Roth IRAs, the same tax and contribution rules apply.
President Barack Obama said last January that he would direct the Treasury Department to set up a new savings bond, called myRA, to allow working Americans to kickstart their own retirement savings. “It’s a new savings bond that encourages folks to build a nest egg,” Obama said during his 2014 State of the Union speech. “MyRA guarantees a decent return with no risk of losing what you put in.”
Lew stated Wednesday that myRA “is designed to remove common barriers to saving, and give people an easy way to get started.”
But groups like the Securities Industry and Financial Markets Association, the American Bankers Association and the Financial Services Roundtable have asked Treasury to “provide clear guidance” on the process for transferring myRA account balances to private sector Roth IRAs. The guidance, the groups say, should be clear “so that the defaulted provider who receives the myRA account holder does not have to treat the account owner as a missing participant, or, alternatively, require acknowledgement from the account holder prior to a default account transfer.”
The groups also noted in their letter to Treasury that the transfers of former employees’ retirement accounts from a company’s 401(k) plan to a financial institution without their consent or signature fall under the automatic rollover safe harbor provision of section 657of the Economic Growth and Tax Relief Reconciliation Act of 2001. “We suggest that Treasury consider adopting similar safe harbor default investment rules for the myRA program.”
— Check out Washington Governor OKs Small Business Retirement Marketplace on ThinkAdvisor.