WASHINGTON (1/31/14)--In an opinion piece scheduled to be published today in McClatchy newspapers, U.S. Treasury Secretary Jacob Lew discusses MyRA--the new retirement account idea unveiled by President Obama in his State of the Union address Tuesday night.
Lew calls the instrument a "simple, safe and affordable starter savings account to help low- and moderate-income Americans begin building towards a more secure financial future."
Lew says there is a stark picture out there when it comes to retirement savings. "Only about half of all workers have access to an employer-based retirement plan, such as a 401(k). And left on their own, few workers save. It is estimated that fewer than one out of 10 eligible workers actually contribute to an IRA."
Starting sometime this year, Lew writes, MyRA-- or My Retirement Account--will allow Americans to start retirement savings with an initial deposit of as little as $25 and contribute as little as $5 each payday.
An employer may choose to participate in providing automatic payroll deductions for contributions, making them hassle-free.
Lew notes there are no fees associated with the MyRA and that the full contribution goes into the account and is invested in a U.S. Treasury security.
"That means it will be backed by the full faith and credit of the United States, will earn the same interest rate that is available to federal employees for their retirement savings, and the balance will never go down," Lew says.
The account is belongs to the saver, not the employer, so the account is portable and be rolled into a Roth Individual Retirement Account. MyRA savers also can withdraw their contributions tax-free, at any time.
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