Individuals who make less than $129,000 a year are eligible to participate in President Barack Obama’s MyRA retirement accounts. The U.S. Department of the Treasury, which was tasked with setting up the program after the State of the Union address, pointed out that couples who make $191,000 or less also are eligible to participate in the plan.
Workers who do not have access to a retirement plan at work can open a MyRA account for as little as $25 and contribute $5 or more every paycheck. Account balances will never go down and there are no fees attached to the accounts.
The program initially will be offered through employers and will be backed by the full faith and credit of the United States, the department said in a statement.
MyRAs will earn interest at the same variable rate as the Government Securities Investment Fund in the Thrift Savings Plan for federal employees. Savers may voluntarily roll over their MyRA accounts to private-sector retirement accounts at any time, but once a saver’s account reaches $15,000 or it has been 30 years, the balance will automatically roll over to a private-sector retirement account.
Treasury said it will finalize the program’s rollover procedures when it launches MyRA later this year.
The accounts will be portable so employees can take them with them when they change jobs and their contributions to the accounts can be withdrawn tax free at anytime. Earnings on the accounts can be withdrawn tax free after age 59 1/2.
Employers can offer these accounts to employees but they are not required to administer them or contribute to them. All they are required to do is send a direct deposit to each participating employee’s MyRA account.