As announced in the recent State of the Union address, Obama has taken executive action and instructed the Treasury Department to create a new form of retirement account: the “myRA.” Not a whole lot to get excited about here, but an overview is of some interest:
- Savers will benefit from “principal protection,” such that the account balance will never go down in value.
- Contributions can be withdrawn tax free at any time.
- Savers can keep the account balance when they change jobs (“portability”).
- Workers can start an account with as little as $25.
- The account will earn interest at the same variable interest rate that federal employees receive through the Thrift Savings Plan (TSP) Government Securities Investment Fund.
- Taxpayers in low and middle income households earning up to $191,000 per year will be able to create a myRA account.
- Participants can save up to $15,000, or for a maximum of 30 years, in their myRA account before transferring the balance to a private sector Roth IRA.