myRA Retirement Savings Accounts Explained
Date: September 22, 2016
We all know it's important to start planning for retirement as early as possible. But not everyone has enough money to invest in certain types of retirement accounts and investment products and your employer might not offer 401(k) or 403(b) retirement plans.
A 2015 Bureau of Labor Statistics study revealed that 62 percent of part-time working Americans don't have access to retirement plans at their jobs. This is where a myRA plan can help. Yes, saving can be stressful, but with this new program, at least now saving is an actual option for everyone.
What Is a myRA?
President Obama announced the introduction of the myRA (shorthand for "my IRA") program in his 2014 State of the Union address. The program was developed as an inexpensive retirement account that provides more American families with the ability to invest in their futures. A myRA is a type of Roth IRA offered by the U.S. Department of the Treasury and designed for workers who may not have access to retirement savings programs at their jobs and who have limited options when it comes to saving and investing.
How Does a myRA Work?
It's free to set up a myRA, and the account carries no fees. You can contribute as much or as little as you want to your myRA account as long as it's within the government-regulated yearly contribution limits and interest on the account is earned at the same rate as investments in the Government Securities Fund. You can have contributions to your account taken directly out of your paycheck, or you can contribute on your own as you see fit. In 2015, the yearly contribution limit for a myRA was $5,500 ($6,500 if you're 50 or older).
When Can You Take Money Out of a myRA?
Unlike a Roth IRA, you can make withdrawals from the account at any time without paying taxes or a penalty fee. If your contributions to your myRA are coming from your paycheck, and you change jobs, you can take the account with you. And, if you leave your money in the account, the government guarantees that the investment won't decline in value. Your investment will continue to grow at whatever the interest rate may be at the time. Once the amount in the account reaches $15,000 or the account reaches 30 years old, it is automatically rolled over into a private-sector Roth IRA.
Consider a myRA to Help You Save for the Future
This program is great for both young people just entering the workforce and also for contract employees who may not have retirement savings options at their jobs. The myRA program was created to give everyone the opportunity to save and plan for retirement and it's free to start, so it's worth considering.