MyRA

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.

BREAKING DOWN '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. Roth IRA

    An individual retirement plan that bears many similarities to ...
  2. Savings Incentive Match Plan For ...

    A retirement plan that may be established by employers, including ...
  3. Provident Fund

    A compulsory, government-managed retirement savings scheme used ...
  4. SIMPLE IRA

    A retirement plan that can be used by most small businesses with ...
  5. Auto Enrollment Plan

    An employer’s decision to sign employees up to have a percentage ...
  6. Individual Retirement Account - ...

    An investing tool used by individuals to earn and earmark funds ...
Related Articles
  1. Your Clients

    myRA: How it Will Work, Pros and Cons

    The myRA is a new account designed to help millions of Americans save for retirement. Here's a look at how it'll work.
  2. Retirement

    Is the New myRA Plan Right for You?

    The new myRA accounts seem to deliver on their promise of being “simple, safe and affordable.” Just be prepared for paltry annual returns.
  3. Economics

    Obama’s Final Gesture to Expand Retirement

    President Obama has announced that the 2017 congressional budget will feature an attempt to expand access to qualified retirement savings accounts for workers.
  4. Retirement

    Find An IRA Account With No Minimum Deposit

    Three ways to start saving for retirement with a Roth or traditional IRA, no matter how little you have to invest.
  5. Retirement

    Retirement Savings for Small-Business Employees

    President Obama’s new budget gives high priority to improving retirement plans, especially for employees of small companies.
  6. Saving and Spending

    How Would Forced Retirement Saving Work?

    The nation needs an overhaul when it comes to better planning for retirement. Here are some proposed solutions.
  7. Retirement

    8 Essential Tips For Retirement Saving

    These eight tips can help your retirement savings grow.
  8. Retirement

    Retirement Planning For 20-Somethings: Saving Options

    For the most part, you will be responsible for adding amounts to your retirement nest egg. However, if you work for an employer that provides benefits under a retirement plan, you may be able ...
  9. Investing Basics

    8 Essential Tips For Retirement Saving

    Whether you're a saver or a financial advisor who want to give their clients a leg up, these 8 tips are essential for financial planning.
  10. Retirement

    Roth IRA Contribution Rules: The Basics

    What you need to know about Roth IRA contributions – from eligibility to dollar limits, deadlines to tax breaks.
RELATED FAQS
  1. Why are IRA, Roth IRAs and 401(k) contributions limited?

    Find out why contributions to IRA, Roth IRA and 401(k) retirement savings plans are limited by the IRS, including what the ... Read Answer >>
  2. Can I contribute to a Roth IRA and still participate in my employer-sponsored retirement ...

    Find out the rules and limits on contributing to both a Roth IRA and employer-sponsored retirement plan. Read Answer >>
  3. What's the difference between a 401(k) and a Roth IRA?

    Discover that a 401(k) and a Roth IRA differ primarily on tax treatment, investment options, employer involvement, and limitations ... Read Answer >>
  4. Can an individual contribute to both a Roth IRA and a Traditional IRA in the same ...

    Yes, an individual can contribute to both a Roth IRA and a Traditional IRA in the same year. The total contribution into ... Read Answer >>
  5. Is a Roth IRA a qualified retirement plan?

    Analyzes the eligibility of the Roth IRA as a qualified retirement plan and explores the differences between the Roth IRA, ... Read Answer >>
  6. I'm in my 50s. Should I still participate in my company's Roth 401(k)?

    Find out why contributing to an employer-sponsored Roth 401(k) in your 50s can be an especially effective way to bulk up ... Read Answer >>
Hot Definitions
  1. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  2. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  3. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center