Aa
Treasury Finalizes Rules For New Retirement Savings Account: The myRA
A new retirement savings vehicle, the myRA (my retirement account), is now one step closer to being available after the Department of the Treasury’s final regulations became effective December 15, 2014. The myRA was first announced earlier in 2014 by President Obama in his State of the Union Address. The myRA is touted as a no-cost to employer and no fee investment option for employees who lack an employer sponsored retirement savings plan. However, the exact details of the savings program remained unclear until the Treasury Department’s newly adopted regulations. As such, a quick overview of the new regulations is warranted in order to better understand this new option for Americans looking to save for retirement.
The Treasury Department authorized a new “nonmarketable, electronic retirement savings bond” that will only be available to participants in the myRA. The bond will provide a principal protected investment while earning interest at the same rate available in the Government Investment Fund (G-Fund) of the Federal Thrift Savings Plan. The G-Fund type of government bond was previously unavailable to anyone outside of the Thrift Savings Plan. While this is a very secure investment, offering very little risk to the participant, the returns are also very low compared to the historical returns from equity investments. This could be a concern for younger participants, as they should be taking on more risk within their retirement investments.
Additionally, the new regulations state that the myRA is going to be treated as a Roth IRA. This means all of the interest growth inside the myRA on the new electronic savings bond will come out tax free if certain holding period and trigger events are satisfied. By treating the myRA as a Roth IRA, the Treasury Department also helped exclude myRA account balances from required minimum distribution requirements after age 70 ½. This could be a big benefit for some individuals looking for tax and investment class diversification.
The myRA is going to have a maximum balance limitation of $15,000 or 30 years of participation, whichever occurs first. It is also interesting to note that the entire account balance cannot exceed $15,000, interest and contributions included. This means that participants need to spread out their contributions and not contribute too much up-front. For instance, if you contribute $14,000 over the next three years, you could only enjoy $1,000 of growth in the account before being forced to transfer the entire account balance to a new investment. This highlights the idea that the myRA is designed to be a starter savings vehicle and not designed to replace traditional retirement plans. Once a participant reaches the maximum threshold, the account balance will need to be transferred out of the myRA and into another account. Because the myRA is going to be treated as a Roth IRA, the entire account will be transferable directly to a Roth IRA with a financial services provider that can offer a much wider array of investment products, including higher rates of return.
According to the new rules, the same limits for contributions that apply to all other Roth IRA contributions will also apply to contributions for the myRA. This means that in 2015 an individual will only be able to contribute a maximum of $5,500 in aggregate to all of his or her IRA accounts, including the myRA. Additionally, an individual’s adjusted gross income phase-out range for a single taxpayer making contributions to a Roth IRA will be $116,000 to $131,000 and $183,000 to $193,000 for a married individual filing jointly for 2015. This means if someone makes more than the upper end of the phase-out limit they will be unable to contribute to a myRA.
While the new Treasury Department regulations push the myRA ahead, there are still questions remaining. For example, will there be widespread adoption and use of the myRA? Will individuals be able to make contributions without the involvement of their employer? Additionally, the maximum account balance rules and limited low return investment options place significant limitations on the myRA, potentially limiting its overall impact. However, in some ways, the most significant benefit of the myRA might be the behavioral impact of introducing employees to a low cost way to start saving for retirement at an early age. While the myRA will not solve all of the retirement planning issues in the United States by itself, its creation is still a step in the right direction by creating a vehicle for more access to low cost retirement savings options for employees.
SOURCE: http://www.forbes.com/sites/jamiehopkins/2014/12/16/department-of-treasury-finalizes-rules-for-a-new-retirement-savings-vehicle-the-myra/
The Treasury Department authorized a new “nonmarketable, electronic retirement savings bond” that will only be available to participants in the myRA. The bond will provide a principal protected investment while earning interest at the same rate available in the Government Investment Fund (G-Fund) of the Federal Thrift Savings Plan. The G-Fund type of government bond was previously unavailable to anyone outside of the Thrift Savings Plan. While this is a very secure investment, offering very little risk to the participant, the returns are also very low compared to the historical returns from equity investments. This could be a concern for younger participants, as they should be taking on more risk within their retirement investments.
Additionally, the new regulations state that the myRA is going to be treated as a Roth IRA. This means all of the interest growth inside the myRA on the new electronic savings bond will come out tax free if certain holding period and trigger events are satisfied. By treating the myRA as a Roth IRA, the Treasury Department also helped exclude myRA account balances from required minimum distribution requirements after age 70 ½. This could be a big benefit for some individuals looking for tax and investment class diversification.
The myRA is going to have a maximum balance limitation of $15,000 or 30 years of participation, whichever occurs first. It is also interesting to note that the entire account balance cannot exceed $15,000, interest and contributions included. This means that participants need to spread out their contributions and not contribute too much up-front. For instance, if you contribute $14,000 over the next three years, you could only enjoy $1,000 of growth in the account before being forced to transfer the entire account balance to a new investment. This highlights the idea that the myRA is designed to be a starter savings vehicle and not designed to replace traditional retirement plans. Once a participant reaches the maximum threshold, the account balance will need to be transferred out of the myRA and into another account. Because the myRA is going to be treated as a Roth IRA, the entire account will be transferable directly to a Roth IRA with a financial services provider that can offer a much wider array of investment products, including higher rates of return.
According to the new rules, the same limits for contributions that apply to all other Roth IRA contributions will also apply to contributions for the myRA. This means that in 2015 an individual will only be able to contribute a maximum of $5,500 in aggregate to all of his or her IRA accounts, including the myRA. Additionally, an individual’s adjusted gross income phase-out range for a single taxpayer making contributions to a Roth IRA will be $116,000 to $131,000 and $183,000 to $193,000 for a married individual filing jointly for 2015. This means if someone makes more than the upper end of the phase-out limit they will be unable to contribute to a myRA.
While the new Treasury Department regulations push the myRA ahead, there are still questions remaining. For example, will there be widespread adoption and use of the myRA? Will individuals be able to make contributions without the involvement of their employer? Additionally, the maximum account balance rules and limited low return investment options place significant limitations on the myRA, potentially limiting its overall impact. However, in some ways, the most significant benefit of the myRA might be the behavioral impact of introducing employees to a low cost way to start saving for retirement at an early age. While the myRA will not solve all of the retirement planning issues in the United States by itself, its creation is still a step in the right direction by creating a vehicle for more access to low cost retirement savings options for employees.
SOURCE: http://www.forbes.com/sites/jamiehopkins/2014/12/16/department-of-treasury-finalizes-rules-for-a-new-retirement-savings-vehicle-the-myra/
Any kind of a vehicle that helps people save for the future is good imo.
The government is borrowing from the future though by offering it as a roth (once it's contributed it has then broken free from the bonds of taxation).
I wonder what the interest rate is, my money market account at the bank yields only .07%!!!
This is targeted to those that are not financially literate, so again that is a good thing.
Heck, you open a free roth account at most brokerage firms, but most probably do have a minimum balance, but you could also by a mutual fund with no commission within the account.
Real yourself back to the center some and maybe you can see the benefits.
My Bush vote is already cast!
The government is borrowing from the future though by offering it as a roth (once it's contributed it has then broken free from the bonds of taxation).
I wonder what the interest rate is, my money market account at the bank yields only .07%!!!
This is targeted to those that are not financially literate, so again that is a good thing.
Heck, you open a free roth account at most brokerage firms, but most probably do have a minimum balance, but you could also by a mutual fund with no commission within the account.
Real yourself back to the center some and maybe you can see the benefits.
My Bush vote is already cast!
I guess in these regards, I'm lucky. I don't have spare money to invest, but if I did, I'd look around.
"If it walks like a duck, talks like a duck....."
"If it walks like a duck, talks like a duck....."
In all seriousness Brice... I REALLY want to know what the Democrats on the CE-forum think about this.
Way back when, when Obamacare first hit the airwaves, I posed the same question to the Left, and there were very few who liked it. And if memory serves, only 25% of the country as a whole, thought it was a good idea (75% against, 25% for). It was subsequently rammed down our throats, and the Left got on board the party-train, and are now towing the line ssaying that it's the greatest program on earth.
And now... I pose THIS to the Left on the forum:
Is the "myRA" a good idea, or is it a bad idea, and why do you think that?
Maybe I should do a poll...
Way back when, when Obamacare first hit the airwaves, I posed the same question to the Left, and there were very few who liked it. And if memory serves, only 25% of the country as a whole, thought it was a good idea (75% against, 25% for). It was subsequently rammed down our throats, and the Left got on board the party-train, and are now towing the line ssaying that it's the greatest program on earth.
And now... I pose THIS to the Left on the forum:
Is the "myRA" a good idea, or is it a bad idea, and why do you think that?
Maybe I should do a poll...
You know better than that.
"The myRA is going to have a maximum balance limitation of $15,000 or 30 years of participation..."
Am I missing something here? Who the hell thinks this is a good idea? (meaning, what kind of people are they trying to get their hooks into)
Not for nothin, but $15K isn't going to go very far.
This is a worse idea that Obamacare.
I'm wondering when this is going to turn from strictly voluntary, to MANDITORY (like social-security).
It's another way for the gov't to get their hands on even MORE of our money.
Democrats... PLEASE tell me you don't think this is a good idea. PLEASE tell me you're more intelligent than this, and can see right through this pathetic attempt to fund the gov't. They "borrowed" from SS and have nearly bankrupted it. They will NOT be able to keep their hands off this money, not to mention the fact that $15K is nothing, when it comes to retirement savings.
Please weigh in Democrats. I want to hear what you think about this.
Am I missing something here? Who the hell thinks this is a good idea? (meaning, what kind of people are they trying to get their hooks into)
Not for nothin, but $15K isn't going to go very far.
This is a worse idea that Obamacare.
I'm wondering when this is going to turn from strictly voluntary, to MANDITORY (like social-security).
It's another way for the gov't to get their hands on even MORE of our money.
Democrats... PLEASE tell me you don't think this is a good idea. PLEASE tell me you're more intelligent than this, and can see right through this pathetic attempt to fund the gov't. They "borrowed" from SS and have nearly bankrupted it. They will NOT be able to keep their hands off this money, not to mention the fact that $15K is nothing, when it comes to retirement savings.
Please weigh in Democrats. I want to hear what you think about this.
You must join this user group in order to participate in this discussion.
You are reading content posted in the Current Events . . . Group
A list of national and international resources and hotlines to help connect you to needed health and medical services.
Herpes sores blister, then burst, scab and heal.
Herpes spreads by oral, vaginal and anal sex.
STIs are the most common cause of genital sores.
Condoms are the most effective way to prevent HIV and STDs.
PrEP is used by people with high risk to prevent HIV infection.
