Small employers who don’t offer 401(k) plans to their employees have a new option with the federal government’s myRA program, officially launched today by the U.S. Department of the Treasury.
First announced by President Barack Obama in his 2014 State of the Union address, myRA accounts are designed as an easy way for employers to offer a retirement plan to workers without the administrative hassles of a 401(k) plan.
With the initial pilot phase of the program concluded, the myRA program is now available nationwide. Workers who don’t have a 401(k) plan can set up automatic direct deposit contributions to their myRA accounts through payroll deduction with their employer or set up recurring or one-time contributions from their personal checking or savings account.
"Anything that helps American workers save more is a positive," says Robert C. Lawton, president of Lawton Retirement Plan Consultants, LLC and regular EBN blogger. "Although projected earnings for these accounts will always be low, that is offset by the fact that investors will not lose money by investing in them."
Treasury Secretary Jacob Lew called the myRA a “starter retirement account” and said the Treasury Department has been working with a pilot group of employers since last December.
The maximum balance in a myRA account is $15,000, at which time employees can transfer the balance to a private-sector Roth IRA. The maximum annual contribution to a myRA is $5,500 per year, or $6,500 per year for people who will be 50 or older at the end of the year.
“Millions of American workers don’t have a way to save for retirement at work,” said Lew during a conference call announcing myRA’s launch. “One thing we know is that when people start saving, there’s a good chance they’ll continue. The challenge is to get started in the first place.”
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