WASHINGTON (6/17/15)--Credit unions and other financial institutions may see a possible increase in business customers who request split payroll direct deposit services to fund myRA accounts, the Treasury’s new starter retirement savings option, said CUNA in a recent CompBlog post.
myRA, which was introduced in January 2014 by the Obama administration, is a Roth IRA account for people who lack access to employer-sponsored retirement savings plans.
In an interview with Forbes shortly after the program's announcement, CUNA Chief Economist Bill Hampel described credit unions’ lower-cost retirement account series. He said most credit unions would allow members to open a Roth IRA with the same minimum $25 deposit myRA will have. “The myRA is, in essence, a formalized version of what most credit unions offer,” he told Forbes.
Individuals can make after-tax contributions to their myRA accounts via regular payroll deductions, with additional funding mechanisms becoming available in the future, said the Fed’s notice.
myRA accounts allow individuals to contribute from multiple jobs and are portable when individuals switch jobs. Contributions are invested in a U S. Treasury savings bond that carries no risk of losing money and earns interest at the same rate as investments in the government securities fund available to federal employees.
As with all Roth IRAs, the maximum annual contribution is $5,500 (or $6,500 for those age 50 or older), income limits apply, and the after-tax contributions to the account can be withdrawn at any time without a tax or penalty. Savers can contribute to their myRAs for 30 years or until the balance reaches $15,000. When either limit is reached, savings will be transferred or rolled over to a private-sector Roth IRA where individuals can continue to grow their savings.