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myRA Retirement Program to Shut Down

(posted: July 31st, 2017)


The U.S. Department of the Treasury is ending its myRA small business retirement plan program, which started in 2014. It turns out the program was not cost effective.

Deposits to accounts will no longer be accepted starting December 4, 2017.

MyRA account holders are being notified of the prgoram's end and how to move their myRA savings to a Roth IRA. Participants are encouraged to visit www.myRA.gov for additional information, including help selecting a new Roth IRA provider and moving their funds.

The program was created to help low- to middle-income earners start saving for retirement. "Unfortunately, there has been very little demand for the program, and the cost to taxpayers cannot be justified by the assets in the program," U.S. Treasurer Jovita Carranza said in a July 28 announcement.

The myRA program allowed employers with no defined contribution retirement plan to participate in the myRA program, setting up accounts for their employees on the Treasury's myRA website. The accounts, which were funded exclusively through payroll deductions, had the same tax benefits as Roth individual retirement accounts (IRAs), meaning that contributions were made with post-tax dollars and withdrawals during retirement will not be taxed.

The biggest drawback of myRAs for the investor may have been that the only available investment was an interest-bearing account backed by the U.S. Treasury, with a recent interest rate of just 2.25 percent. While higher than savings accounts and many CDs, it was not a high rate of return. On the other hand, myRAs were intended as a stepping stone to retirement savings vehicles like IRAs and Roth IRAs, not as a long-term investment on their own.

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