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Does your company offer a retirement savings plan to all of its employees? If not, you may want to consider myRA (My Retirement Account), a simple, safe, and affordable option coming soon from the U.S. Department of the Treasury. myRA, which Treasury willintroduce in late 2014, will be a Roth IRA invested in a U.S. retirement savings bond and will be designed for workers who want to start saving for retirement but don’t have access to a 401(k) or other workplace retirement plan.
Here are five questions Treasury has received from employers about myRA.
What will myRA cost my company?
There are no myRA fees for you or your employees, and no employer contributions. Once an employee signs up, you will simply set up direct deposit to send the employee’s contributions to myRA.
Who will administer the accounts, and what responsibilities would I have?
Treasury will designate a financial agent to maintain accounts and provide ongoing account communication and customer service to your employees. You will not handle account administration, and you will not have any fiduciary responsibilities. Employees will sign up for myRA online through a website maintained by Treasury. Employees will access their myRA accounts online and contact Treasury’s financial agent with questions specific to their accounts.
Treasury will make materials available for you to share with your employees. These materials will explain myRA and the benefits of signing up for it. Treasury will offer a brochure, FAQs, newsletters, and social media posts that you can easily add to your current employee communications. These materials will be available online and can be downloaded for free.
How will myRA benefit my employees?
myRA will provide a simple, safe, and affordable way for your employees to start saving for retirement. There will be no fees, and the accounts will never go down in value. Employee contributions will be invested in a new U.S. retirement savings bond that earns interest at the same variable rate as the Treasury bond investment option offered to federal government employees for their retirement savings. Other key features include:
• Automatic deposits every payday, so employees and employers can set it and forget it.
• Portability – the account belongs to the individual, and is not tied to a single employer.
• Contributions that can be withdrawn tax free.
• Roth IRA tax advantages: earnings that can be withdrawn tax free after five years and after the saver reaches age 59½.
• Account invested in a U.S. Treasury security.
myRA will have Roth IRA income limits on eligibility to contribute and dollar limits on annual contributions. For 2014, income limits are $129,000 for individuals and $191,000 for households. Each year, savers can contribute up to $5,500 ($6,500 if at least age 50). Both of these limits may change from year to year for cost-of-living adjustments. Balances can be transferred to a private sector Roth IRA at any time. If myRA accounts reach a balance of $15,000 or a 30-year life, the accounts will no longer earn interest and Treasury will work with savers to transfer their balances to private-sector Roth IRAs.
How will myRA relate to retirement plans offered by the private sector?
myRA is intended to enhance private-sector retirement solutions.It will not compete with 401(k) or other employer-sponsored plans or with other retirement accounts and products offered by the private sector, and it is not intended for employees who are eligible to participate in an employer plan. With no fees and the opportunity to contribute through payroll direct deposit, myRA will fill a critical need in the market and is designed to help people get into the habit of saving for retirement. myRA balances can be transferred to private-sector Roth IRAs at any time. Even if your company offers a 401(k) or other savings plan to most of your employees, you may still be a good fit for myRA if you have part-time, seasonal, or other employees who are not eligible to participate in your plan.
Why should I make myRA available to employees?
Research shows that many Americans are not saving enough—if anything at all—for retirement; only about half have access to an employer-sponsored retirement plan. By making myRA available to your employees, you can underscore your commitment to their financial well-being by helping them take a meaningful first step toward preparing for retirement. Making myRA available may also help you hire and retain staff, a critical issue for all businesses large and small.
Want to learn more about myRA or find out how to make it available to your employees? Contact the myRA team at myRAInquiries@fiscal.treasury.gov or visit myRA.treasury.gov.
Mary Miller is Under Secretary for Domestic Finance, U.S. Department of the Treasury.
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