President authorizes Treasury to establish MyRA accounts

On January 29, 2014, President Obama signed a presidential memorandum directing the U.S. Treasury to establish MyRAs, a more accessible version of a Roth IRA that the President touted during his State of the Union speech.

This new product would be available to households earning up to $191,000 a year who currently lack access to workplace retirement savings plans. Initial investments could be as low as $25 and contributions that are as low as $5 could be made through payroll deductions. These accounts will be offered through an initial pilot program to employees of employers who choose to participate by the end of 2014. Employers will neither administer the accounts nor contribute to them. Participants could save up to $15,000, or for a maximum of 30 years, in their accounts before transferring their balance to a Roth IRA.

Treasury Secretary Jack Lew said the MyRA is not the entirety of what the administration believes it should do on retirement policy, but that it fills a gap and is a step that does not require approval by Congress. “We think this fills a space which, very importantly, we can do by our own authority,” Lew said. “And it’s something that we’re going to have in place by the end of the year, and we’re very excited about it.”

In the State of the Union address, the President also called on Congress to enact legislation to provide employees with access to “automatic IRAs,” a proposal that he has made in prior years. Under this proposal, employers that do not sponsor a retirement plan would be required to enroll their employees in a payroll deduction IRA.

Source: White House Fact Sheet, “Opportunity for All: Securing a Dignified Retirement for All Americans,” January 29, 2014.

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