myRA is a new retirement savings option for anyone looking for a simple, safe, and affordable way to start saving. myRA is designed for people without access to employer-sponsored retirement savings plans. myRA is not intended to replace existing retirement savings options, including employer-sponsored retirement plans. If you are eligible for an employer-sponsored plan, such as a 401(k) plan, saving for retirement in those accounts might include special incentives for saving, such as an employer match.
myRA offers a simple, safe, and affordable way to start saving for retirement. myRA could be a good option for you if you have not started saving for retirement because:
- You don’t have access to a retirement savings plan through your work;
- You have no other options available to start saving for retirement;
- You find the cost of opening and maintaining a retirement savings account is too high; or
- You are concerned about complicated investment options and losing money.
There are several ways to start funding your myRA account:
- From your paycheck. You can set up automatic direct deposit to your myRA with your employer.
- From a checking or savings account. You can set up recurring or one-time contributions to your myRA from another account, such as your bank or credit union savings or checking account.
- From your federal tax refund. When you file your taxes, you can direct all or part of your federal tax refund to your myRA.
Unlike other Roth IRAs, myRA has features designed to make it a starter retirement savings account. myRA is invested in a single United States Treasury retirement savings bond, which will not lose money and is backed by the United States Treasury. Money that you put in your myRA will earn interest until your account reaches $15,000 or 30 years from the day you first fund the account (whichever comes first). The account balance will then be transferred to a private-sector Roth IRA, where you can continue to invest your savings and make additional contributions. You can also transfer or roll over your myRA to a private-sector Roth IRA of your choice at any time.
The money you put in your myRA account is invested in a United States Treasury savings bond, that safely earns interest at the same variable rate as investments in the Government Securities Fund for federal employees.These investments earned 2.04 percent in 2015 and had an average annual return of 2.94 percent over the ten-year period ending December 2015. Past performance is not a guarantee of or prediction of current or future performance.
myRA accounts earn interest at the same variable rate as investments in the Government Securities Investment Fund in the Thrift Savings Plan for federal employees.These investments earned 2.04 percent in 2015 and had an average annual return of 2.94 percent over the ten-year period ending December 2015. More performance information can be found on the Thrift Savings Plan website. Past performance is not a guarantee of or prediction of current or future performance.
There is no cost to having a myRA account. myRA accounts have no fees. There are no minimum contributions (the amount you put in the account) and you are not required to keep a minimum account balance (the amount saved in the account).
You can put in (or contribute to) your myRA as little as a few dollars a month up to $5,500 per year (or $6,500 per year if you will be 50 years of age or older at the end of the year) but not more than your earned income. See how your savings can add up over time. The contribution limits listed are for 2016 and they may change in future years. Money in your myRA continues to earn interest until your account reaches $15,000, or 30 years from the day you first funded the account (whichever comes first). Then the balance will be transferred to a private-sector Roth IRA, where you can continue to invest your savings and make additional contributions. You can also transfer or roll over your myRA to a private-sector Roth IRA of your choice at any time.
The Roth IRA structure has a number of benefits, including:
- Allows for tax-free and penalty-free withdrawal of money you put in (your contributions) at any time.
- Provides tax-favored treatment at the time of payout rather than at the time of contribution, which is generally a good fit for savers, who are currently in a low tax bracket but may have higher income in the future.
- Makes it easy for savers to transfer or roll over their savings tax-free to private-sector Roth IRAs.
The savings in your myRA are invested in a single retirement savings bond issued by the U.S. Department of the Treasury. The bond has a maturity date based on the value ($15,000) and age (30 years) of the account. This means, that when your myRA reaches $15,000 or 30 years from your first contribution (whichever comes first), the account will stop earning interest and the balance will have to be transferred to a private-sector Roth IRA. myRA allows you to safely accumulate savings until you are in a better position to transition to the private sector, where you have more investment options and opportunities to continue to grow your savings.
The regulation governing myRA is 31 CFR Part 347, which was issued on December 15, 2014. The regulation can be accessed at http://www.gpo.gov/fdsys/pkg/FR-2014-12-15/html/2014-29334.htm
The investment in your myRA account will not lose money (unlike investments in stock and other investments tied to the market). myRA is designed to be a starter account and places priority on the stability and preservation of your money rather than on the opportunity to earn higher returns with greater risk. myRA allows you to safely build up your savings before you transition to a private sector Roth IRA, where you can continue to grow your savings with investment options that have different risk-return characteristics.
The interest rate for myRA accounts can change month to month and is updated at the beginning of each month. More performance information can be found on the Thrift Savings Plan website.
Yes, myRA earns a single variable interest rate that applies to all accounts. All myRA accounts earn interest at the same variable rate as investments in the Government Securities Investment Fund in the Thrift Savings Plan for federal employees. More performance information can be found on the Thrift Savings Plan website.
Yes. The interest your myRA earns is compounded daily. This means that any interest earned is added to the money you have contributed (the principal), so that the added interest also earns interest.
The money you put in (your contributions) and interest earned in your myRA account do not have to be reported on federal income tax returns until you take the money out (in tax terms also known as “distribution”).
Although you are not required to report contributions to the IRS on federal tax forms, the IRS receives reports about your contributions from Comerica Bank, the financial institution designated as the trustee of your myRA account. In particular, both you and the IRS will receive information annually about the money you put in (contributions) and the total amount of money in your myRA. This information is reported on Form 5498, IRA Contribution Information.
myRA accounts are administered by Comerica Bank on behalf of the United States Department of the Treasury. Comerica Bank is the financial agent for the U.S. Treasury for myRA. Financial agents are banks that are designated by the United States Treasury to perform specific duties on behalf of the federal government.