The government recently announced plans to test its MyRA program, which aims to help workers who lack employer-sponsored retirement plans or cannot afford a Roth IRA. The program will be administered through the Treasury’s savings bond authority and managed by the Treasury and one other agent.
“Later this year, the Treasury will work to choose a financial agent,” explains a U.S. Treasury official in an interview with I&T. That agent will administer the program, he says, and the government will utilize its existing infrastructure for performing functions to customers. Decisions regarding the user experience of MyRA account holders will be made in coming months as the Treasury launches the program, which it was instructed to do last Wednesday through the Presidential Memorandum.
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MyRA is still in its early planning stages and will be first available to people who work for employers that sign up for the program. Once the testing stage is complete, MyRA will be rolled out to any American who has direct deposit and a household income of under $191,000.
The no-fee MyRA program resembles a Roth IRA in that users will contribute after-tax dollars. Participants can open their accounts with an initial deposit of $25 and contribute a minimum of $5 per day. While users won’t contribute much, they won’t gain much, either – the 10-year average ROI is just 3.6%, reports CNN. Once account funds reach $15,000, the holder is required to transfer the money into a private sector account.
Financial companies should not worry about potential disruption, according to MarketWatch, which wrote: “With its low caps and its potentially low returns, the myRA doesn’t seem especially competitive with more traditional 401(k)s and IRAs." The website also notes that its low stakes could actually prove agreeable to the financial services industry, as it doesn’t pose the threat of competition.