Here’s What the Death of the myRA Program Really Means for Your Retirement
During his State of the Union address in January 2014, President Barack Obama announced the government would launch a no-risk way for low- to medium-income families to save toward retirement by allowing them to set up government-sponsored Roth IRAs.
The plan, called “myRA,” launched as a pilot in late 2014, and it became available to the public in 2015. The plan was intended to provide a savings option with no minimum contributions for people who did not have an employer-sponsored retirement plan, such as a 401(k).
This week, the U.S. Treasury Department announced it’s phasing myRA out.
myRA was not necessarily successful. Forbes reports that only about 30,000 people signed up for the program and contributed $34 million in funds. About 20,000 accounts hold a median balance of $500 each, while the other 10,000 have no funds at all.
With such little use, the Trump administration determined myRA costs more to operate than it’s worth. The program has cost taxpayers about $70 million so far and was estimated to cost another $10 million per year.
The myRA program did not have a significant marketing budget, so many Americans may not have even known of its existence.
According to the press release, “Retirement savers have options in the private sector that offer no account maintenance fees, no minimum balance, and safe investment opportunities.”
Effective immediately, people cannot sign up for new myRA accounts. Current account holders received an email on Friday informing them about the government’s decision to phase out the program. The email also provides information on how to move their myRA savings into another Roth IRA.
Anyone who has questions can head to the myRA webpage for additional information.
So What’s Next for Your Retirement Savings?
While the myRA program was a nice option for those who didn’t know how to save for retirement on a small budget, there are many ways to start investing on any budget.
If you work for a company that offers a 401(k) plan, that’s probably your best option. Many companies offer a small percentage of matching funds as an incentive to start saving, so you’re basically getting free money.
If your employer doesn’t offer a 401(k) or you’re self-employed, a Roth IRA may be your best bet. It’s simple and uses post-tax dollars, so you can get your money and dividend earnings tax-free when you make a withdrawal. As a bonus, you can even get a tax credit with the retirement savings contributions credit. You can search online for options with no minimum balance and no transaction fees from private companies like TD Ameritrade.
Don’t worry — the death of myRA doesn’t mean your money is going away. You simply need to find a new home for your investments. Don’t let this set your retirement plans back. Keep saving!
This article contains general information and explains options you may have, but it is not intended to be investment advice or a personal recommendation. We can’t personalize articles for our readers, so your situation may vary from the one discussed here. Please seek a licensed professional for tax advice, legal advice, financial planning advice or investment advice.
Tyler Omoth is a senior writer at The Penny Hoarder who loves soaking up the sun and finding creative ways to help others. Catch him on Twitter at @Tyomoth.