The U.S. Department of the Treasury has decided to phase out the myRA retirement savings program and the program is no longer accepting new enrollments. However, existing accounts remain open and accessible at this time. Funds in myRA accounts remain in an investment issued by the U.S. Department of the Treasury
Due to low demand since the program started in 2014, The U.S. Department of the Treasury takes action to wind down the myRA program after a thorough review by Treasury that found it not to be cost effective. Just 30,000 people had opened a myRA after three years. According to Treasury, myRA program has cost taxpayers $70 million so far, and was expected to cost $10 million annually going forward.
“The myRA program was created to help low to middle income earners start saving for retirement. Unfortunately, there has been very little demand for the program, and the cost to taxpayers cannot be justified by the assets in the program. Fortunately, ample private sector solutions exist, which resulted in less appeal for myRA. We will be phasing out the myRA program over the coming months. We will be communicating frequently with participants to help facilitate a smooth transition to other investment opportunities,” said Jovita Carranza, U.S. Treasurer.
The myRa was designed to help low- and middle-income workers who don’t have access to a 401(k) or pension at work start saving for retirement. Participants could contribute $5,500 a year, or $6,500 for those age 50 and older. Contributions had to be made with after-tax dollars, but the money could be withdrawn in retirement tax-free. In a sense, myRA was similar to Roth IRA.
To aid low- and middle-income workers in their retirement savings, myRA was 100% risk-free and didn’t have any administrative costs. Funds were invested in super-safe Treasury Securities Fund that offered a return of 2.9% over the past decade. However, cumulative savings in a myRA were capped at $15,000 and the account could not be open longer than 30 years, at which point it would have to be rolled over into a private Roth IRA.
Any myRA with a zero ($0) balance as of September 15, 2017 or later, will be subject to possible automatic closure beginning on September 18, 2017. myRA account holders can open and transition to Roth IRA accounts.
Participants in the myRA program are being notified of the upcoming changes, including information on moving their myRA savings to another Roth IRA. Participants are encouraged to visit www.myRA.gov for additional information or to call myRA customer support with any questions.