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Obama introduces myRA savings plan

By Jennie L. Phipps · Bankrate.com
Wednesday, January 29, 2014
Posted: 10 am ET

If you don't have much money to devote to saving for retirement, the "myRA" plan that President Barack Obama announced in Tuesday night's State of the Union address could be the catalyst to get your retirement planning off the ground.

The president didn't offer many specifics, but he did say, "It's a new savings bond that encourages folks to build a nest egg. MyRA guarantees a decent return with no risk of losing what you put in."

MyRAs are expected to be similar to Roth IRAs, allowing initial investments as low as $25 and subsequent investments that could be as low as $5. If the plan offers an interest rate that is similar to the Thrift Savings Plan available to federal workers, it would have paid an average of 1.47 percent in 2012, the latest average rate published on the Thrift Savings Plan website. Once a myRA reaches a certain dollar level, a worker would be able to transfer the accumulated savings to a regular IRA.

Some critics have pooh-poohed the need for these accounts, but anyone who has tried to help a young adult set up a retirement savings account with a small amount of money knows that the current economic realities make that difficult. It is very hard to find an IRA savings plan that will accept an initial investment that is less than $1,000 without a commitment to regular payroll deductions. That leaves out people who are not on anyone's regular payroll. Plus, in today's low interest-rate environment, small savings accounts are likely to shrink rather than grow once even small fees are levied. If the myRA solves these problems, it could help lots of low-earning workers start saving for retirement.

Obama plans to encourage employers to offer myRAs, including handling payroll deductions for participants, but he's doing it by executive order rather than through a congressional vote, so it won't be a mandate that all employers must adopt. More information should be available later this week.

In the State of the Union speech, Obama also called on Congress to make changes to the current tax-advantaged retirement plans so that they do a better job of helping people save who aren't wealthy. "Work with me to fix an upside-down tax code that gives big tax breaks to help the wealthy save, but does little to nothing for middle-class Americans," Obama told members of Congress.

In particular, he urged Congress to authorize a plan that would "offer every American access to an automatic IRA on the job, so they can save at work, just like everyone in this chamber can."

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38 Comments
Skye
January 29, 2014 at 4:23 pm

How could anyone trust Obama with another program that involves your finances? Hasn't he already lied enough? He is trying to make America a socialist, communist country, where the government controls everything in your life. Say goodbye to Freedom.

Tess
January 29, 2014 at 4:15 pm

Forget arguing with these people Craig, they just listened to Rush Limbaugh or Fox News and are spewing their hatred like good little soldiers....

How many of you right wingers are accepting government handouts?

I thought so........

Greg
January 29, 2014 at 4:15 pm

I have 2 children in their 30"s with families. My wife and I constantly worry that they need to start thinking about their retirement. Neither has a retirement from their work and they do not make enough to contribute to the current available accounts. Say what you will but this proposal might just get them started in the right direction. It may not be a perfect solution, few seldom are; but 30 years from now it may just give them the opportunity to enjoy their retirement.

Bob
January 29, 2014 at 3:57 pm

Craig, Get your head out your A$$.... and know that you are part of the PROBLEM!!!!

Craig
January 29, 2014 at 3:27 pm

If he had said that he was going to send you a check you wouldn't turn it down. All the so called "Americans" always trashing our Government but are every social program out. the people to not trust are people like Ted, John and Jerry. They have no solutions just piss poor opinions. What solution to any of the country's problems is what I would like to read. It's either you are part of the problem or part of the solution. MyRA is a great start. I'm all in on the solution.

joe common sense
January 29, 2014 at 3:24 pm

for all the conservatives lest we forget "Mission Accomplished"???? ...wake up...THEY ARE ALL THE SAME...(politicians that is)

MRF
January 29, 2014 at 3:18 pm

This man who is so called President has done nothing good for this nation in the last 5+ years and now he is proposing more of the same, NOTHING! God help us.

Ted
January 29, 2014 at 3:09 pm

Remember what he said.....MY RA. He just said it was HIS RA.
He just turned on the spigots with a bigger hose.

John
January 29, 2014 at 2:59 pm

I do NOT believe anything he says!!!!!

jerry
January 29, 2014 at 2:34 pm

Finally, real thinking Americans speak out. Way to go! Anyone who does not see this as another wealth re-distribution scheme is blind. Not another dime will I put in government hands!!!!!!!!!!

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