What You Need to Know About the New MyRA Accounts
The myRA began in 2015 when the US Treasury Department set out to encourage those without company sponsored plans to begin saving. With nearly half of Americans nearing retirement with no savings, they are vulnerable to an underfunded retirement. Access to a 401Ks or other employer sponsored account gives you the opportunity, to begin with, no initial savings requirement. Workers without a company plan often must save $1,000 or more before opening an account.
Here are the key features of the MyRA account.
No Account Minimums. Open a myRA account with any dollar amount and set up automatic contributions, making it easy to get started. You can open an account online rather than requiring the use of a bank or broker services.
Annual limits. Like other personal IRAs, you can invest up to $5,500 per year into the account or 100% of your earned income. If you are over 50, you may deposit an additional $1,000 annually. Once the account balance grows beyond $15,000, it will convert to a Roth IRA and continue to grow tax-free.
Investment choices. Investing in a myRA pays the prevailing interest rate based on US Treasuries. The current payout is 2.25% on deposits, guaranteeing the funds will not decrease in value.
No fees. Lack of account and annual fees means 100% of deposited money earns interest.
Direct deposit made easy. You may automate contributions through a checking or savings account, add a payroll deduction through your employer, and even deposit part or all of your tax refund into the account.
The myRA follows the rules of a Roth IRA. You do not receive an initial tax benefit, but the money grows in the account tax-free, providing tax-free withdrawals at retirement. You will pay a 10% penalty for withdrawing earnings. However, there is no penalty for withdrawing deposits.