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President Obama Introduces MyRA to Make Retirement Savings a Reality for All by Jack Winter


Posted on February 24, 2014 by Jack Winter

In his January 2014 State of the Union Address, President Obama introduced MyRA, a new savings instrument intended to help more Americans set aside money for retirement.

According to the U.S. Treasury Department, approximately half of all workers and only 25 percent of part-time workers have access to employer-sponsored retirement plans. Equally staggering, a mere 10 percent of eligible workers contribute to retirement accounts, such as IRAs, when left to do so on their own accord. To improve these statistics and help more people build a future of financial security and stability, the President signed an executive order creating My Retirement Account (MyRA), “a starter retirement savings account, backed by the U.S. government.”

Under the terms of the presidential order, employers who choose to participate will be able to offer MyRA accounts to their employees. However, employers will not own the plans nor will they bear the responsibility of managing nor contributing to them. Rather, employees will maintain sole control over their individual plans, which they may take with them when they move from one job to the next or roll into traditional IRAs at any time.

Participating in MyRA plans requires initial investments of as little as $25 and minimum contributions as low as $5 per paycheck. Contributions deducted from after-tax pay through automatic payroll deductions would be invested in government-backed savings bonds earning the same interest rate available to federal employees and providing a safe assurance that principal investments would not be lost with market fluctuations. While investors would be allowed to withdraw principle contributions without penalty, withdrawals of accrued interest prior to age 59-1/2 would be taxed.

About the Author: Jack Winter CPA/PFS CFP is an associate director in the Tax Services practice of Berkowitz Pollack Brant. For more information, call 954-712-7000 or email info@bpbcpa.com.