DEFINITION of 'myRA'

Editor's note: On July 28, 2017, the U.S. Treasury Department announced it would shut down the myRA program. The article below reflects the characteristics and history of the program. 

A tax-advantaged retirement account introduced by President Barack Obama in January 2014 – and launched by the Treasury Department in 2015 – as a way for lower-income workers to save for retirement. It cost nothing to open an account and workers could contribute as little as $5 per month. The maximum balance for a myRA (short for my Retirement Account) was $15,000. On July 28, 2017 the program was shut down by the Treasury Department, because the demand for the accounts could not justify the cost.

BREAKING DOWN 'myRA'

The my​RA program was started because many employers do not offer retirement plans and because most 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.

A myRA account was similar to a Roth IRA in that workers made contributions with post-tax dollars, but contributions grew tax-free and distributions were not taxable. Once the myRA’s balance exceeded $15,000, the worker must roll it over to a private-sector Roth IRA. By the time the account had reached that size, it will have already met the account-opening minimum for a Roth IRA.

People could set up automatic contributions from their paychecks – or from their checking or savings accounts. At tax time, they could also direct all or part of their federal tax refunds to their myRA accounts.There was no cost to employers. They would share myRA information and set up payroll deductions for employees who sign up, or tell them about other ways they can fund their myRA accounts. Contributions were invested in Treasury bonds, which are considered safe but have historically low returns that don’t always exceed inflation rates. However, the government guaranteed the principal in these investments, so workers should never lose their invested principal. The accounts had no fees.

Current holders of my​RA accounts can roll funds over to a Roth IRA

 

RELATED TERMS
  1. IRS Publication 590: Individual ...

    IRS Publication 590: Individual Retirement Arrangements (IRAs) ...
  2. IRA Transfer

    An IRA transfer is the transfer of funds from an individual retirement ...
  3. Designated Roth Account

    Designated Roth account is a separate account in a 401k, 403b ...
  4. Traditional IRA

    An individual retirement account allows individuals to direct ...
  5. Qualified Distribution

    A qualified distribution is made from a Roth IRA and is tax and ...
  6. IRA Adoption Agreement and Plan ...

    An IRA Adoption Agreement and Plan Document is a contract between ...
Related Articles
  1. Retirement

    Hello, myRA: Retirement Savings for Beginners

    A new acronym has been added to the lexicon of savings and retirement plans - the myRA. That stands for My Retirement Account and is a twist on the well-known IRA or Individual Retirement Account.
  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. Retirement

    Now What for myRa Retirement Accounts? Trump Ends Them

    The decision by the Trump administration to do away with myRA retirement accounts means you will need to move your funds to a Roth IRA.
  4. Financial Advisor

    How Would Forced Retirement Saving Work?

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

    Is a Roth IRA or Traditional IRA Better For You?

    There are benefits to both types of IRAs, but it is important to determine which account will work best for you.
  6. Financial Advisor

    Roth IRAs Tutorial

    This comprehensive guide goes through what a Roth IRA is and how to set one up, contribute to it and withdraw from it.
  7. Retirement

    Why Your Roth IRA Should Not Be an Emergency Fund

    Using your Roth IRA as an emergency fund can be a costly mistake because of the loss of tax-free growth and compounding.
  8. Retirement

    Retirement Savings Tools II: IRAs

    An individual retirement account can increase your savings beyond your employer's retirement plan (or if you don't have an employer plan).
  9. Investing

    Can a Backdoor Roth IRA Save You Money in Taxes?

    Here's how high earners can take advantage of a Roth IRA and why all earners should have a Roth IRA.
  10. Financial Advisor

    Will the Backdoor Roth IRA be Eliminated?

    The President’s 2017 budget has proposed several changes to the rules regarding retirement accounts with those for Roth IRAs being the most drastic.
Trading Center