MyRA is a new savings program unveiled by President Obama during his 2014 State of the Union address. It came as a surprise to most as it was never mentioned prior to that night.The savings plan will allow Americans the opportunity to invest in a starter retirement account with little risks and guaranteed decent returns.
President Obama recently said: “Today, most workers don’t have a pension. A Social Security check often isn’t enough on its own. And while the stock market has doubled over the last five years, that doesn’t help folks who don’t have 401(k)s,” . Obama said he would direct the Treasury Department to create new “MyRA” accounts to allow people to more simply invest in Treasury bonds. “It’s a new savings bond that encourages folks to build a nest egg,” .
Safe: The new savings bonds would have its principal guaranteed by the U.S. government, much like a traditional savings bond.
Tax benefits: The MyRA bond would be like a Roth IRA: Your contributions would not be tax-deductible, but your earnings would be free from tax when you withdraw it. As with a Roth, your contributions can be taken out tax-free at any time.
Affordable: Minimum initial investment could be as low as $25, and subsequent investments could be as little as $5, through payroll deduction. Savers can keep the same account when they change jobs.
Rates: Savers will earn interest at the same variable interest rate as the federal employees’ Thrift Savings Plan (TSP) Government Securities Investment Fund. The fund earned 1.74% last year.
Availability: The MyRA would be open to households earning up to $191,000 a year through their employers. Employers won’t incur any cost to offer the MyRAs. You’ll be able to save up to $15,000 a year for up to 30 years before transferring to a private Roth IRA. (read more: MyRA Retirement Plan)