MyRA

AAA

DEFINITION of 'MyRA'

A new tax-advantaged retirement account introduced by President Barack Obama in January 2014 as a way for lower-income workers to save for retirement. Workers can open an account with as little as $25 and contribute as little as $5 per month, and employers will deduct their employees' contributions automatically from their paychecks. The maximum balance for a MyRA is $15,000.

INVESTOPEDIA EXPLAINS 'MyRA'

Because many employers do not offer retirement plans and because traditional and Roth IRAs have account-opening minimums and minimum additional deposit requirements that lower-income workers often can’t meet, President Obama introduced MyRA to give workers who weren’t served by the existing retirement savings plans an easier way to start saving.

MyRA is similar to a Roth IRA in that workers make contributions with post-tax dollars, but contributions grow tax-free and distributions are not taxable. Once the MyRA’s balance exceeds $15,000, the worker must roll it over to a private-sector Roth IRA. By the time the account has reached that size, it will have already met the account-opening minimum for a Roth IRA.

The only way to contribute to a MyRA is through a worker’s employer, and employers don’t have to offer this option. Employers who do offer it will forward employees’ contributions to a plan administrator, who will invest the contributions in Treasury bonds, which are considered safe but have historically low returns that don’t always exceed inflation rates. However, the government guarantees the principal in these investments, so workers should never lose their invested principal. The accounts will have no fees.

 

RELATED TERMS
  1. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  2. Variable Annuitization

    An annuity option in which the amount of income payments received ...
  3. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...
  4. To Fund

    A type of target-date retirement fund whose asset allocation ...
  5. Through Fund

    A type of target-date retirement fund whose asset allocation ...
  6. Leveraged Benefits

    The use – by a business owner or professional practitioner – ...
Related Articles
  1. Hello, myRA: Retirement Savings for ...
    Retirement

    Hello, myRA: Retirement Savings for ...

  2. The Best ETFs For Your 401k
    Mutual Funds & ETFs

    The Best ETFs For Your 401k

  3. What are the differences between a 4 ...
    Retirement

    What are the differences between a 4 ...

  4. 6 Problems With 401k Plans
    Retirement

    6 Problems With 401k Plans

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center