Washington, D.C.— The U.S. Treasury Department’s announcement today of the nationwide launch of myRA could create a simple, affordable, safe, and flexible savings option for millions of Americans.
The myRA, or “my Retirement Account,” is a savings vehicle intended to serve as a “starter retirement account” for workers lacking coverage through their employers. In his 2014 State of the Union, President Barack Obama announced his administration’s intent to create myRA, but the proposal included certain major limitations. In our May 2014 policy paper titled “Solving the Retirement Puzzle,” we analyzed President Obama’s proposal, and argued that with certain adjustments and policy reforms myRA could have a massive impact, promoting both emergency savings and retirement savings for almost any American worker.
In particular, we recommended that the program's scale and impact could be enhanced by:
- Allowing direct deposit of some or all of a tax refund to a myRA account; and
- Allowing transfers to a myRA account from a checking or savings account, opening up myRA to the self-employed, and those who change jobs frequently, an increasingly large segment of the workforce.
By incorporating these changes today, the Treasury’s myRA program will provide access to millions more workers than as originally proposed. While the administration has pitched myRA as a “starter retirement account” the functionality of the account—which does not require a minimum contribution, has no fees, allows contributions to be withdrawn at any time without penalty, and offers a better interest rate than widely available savings accounts—gives the myRA the ability to also act as a personal safety net for American workers, regardless of whether or not their employer offers them a retirement savings plan.
“The launch of myRA with expanded access is great news for American workers. The new account is as versatile as a Swiss Army Knife, creating a safe and simple place to save,” said Reid Cramer, director of the Asset Building program at New America.
“However, there’s quite a bit more that could be done to really maximize myRA’s potential,” added Justin King, policy director of the Asset Building program. “Congress needs to remove savings caps in public assistance programs that prevent families from saving in myRA accounts, and needs to work with the Administration to explore ways to automate myRA opening in the workplace. The Administration also needs to emphasize the flexibility of these accounts, struggling workers need to know they can still access their money when something bad happens.”