On December 15, 2014 The Secretary of the Treasury issued regulations establishing myRA accounts. These regulations were issued in response to President Obama’s directive to create government-backed personal retirement savings accounts starting 2015. The goal of government’s myRA program is to increase personal retirement savings.
What are the main highlights of myRA?
- A voluntary retirement savings option for workers.
- Targeted at low-and-middle income American workers who do not have access to employer-sponsored retirement plans.
- Allows workers to save for retirement using after-tax contributions and withdraw the money in retirement tax-free (no tax on earnings).
- Savers can participate in myRA until their account balance reaches $15,000, or 30 years, whichever occurs first.
- Invests solely in a savings bond backed by the U.S. government.
- Savers can transfer their myRA account balance at any time to a commercial financial services provider of Roth IRA’s.
- Savers can withdraw their contributions at any time but withdrawals of interest before age 59 ½ incur taxes/penalties like a traditional Roth IRA.
What theme does myRA, the recently signed Illinois Secure Choice Savings Program, and the USA Retirement Funds Act being considered by Congress seem to have common?
The theme is to encourage employers, possibly require employers in federal legislation, to offer a retirement savings program to their employees and for employees to start saving and to save more for retirement.
Given this theme what options are available now for employers?
For employers already sponsoring a sponsoring a plan, continue offering a retirement plan and regularly encourage workers to save and save more for retirement. If new legislation or regulation impacts the design requirements of your plan BPC will assist you.
For employers not offering a retirement plan, offer one on your terms. The emerging theme points to offer a plan of your choosing and design that provides tax-advantages to both your company and your employees---or be forced to offer a government designed plan. Employer initiated retirement plans are historically more flexible, effective and attractive than government-mandated options.
For employers with a plan not with BPC and for employers not offering a retirement plan, contact BPC at 800-355-2350 to discuss your retirement plan goals and options and our retirement plan service.