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The myRA Retirement Plan Launch: Everything you Need to Know

Last updated by on April 19, 2016

It’s been over a year and a half since President Obama mentioned a new retirement plan, called myRA (short for “My Retirement Account”) in his State of the Union address. And after some early tests, myRA just officially launched to everyone.

Here’s the premise for myRA’s existence: this country is heading for a massive retirement crisis that could trigger a zombie apocalypse. Look at some of these frightening facts:

  • Fewer than half of private sector workers are enrolled in a 401K plan and many don’t even have the option to enroll.
  • a 2015 BLS Economic Release found that 62% of part-time working Americans don’t have access to a retirement plan at work.
  • a 2013 report by the National Institute on Retirement Savings found that the average near-retirement household had only $12,000 in retirement savings.
  • Nearly half of 401K accounts are cashed out when workers change jobs (which can result in massive tax penalties).
  • The retirement deficit between what Americans have actually saved for retirement and what they should have saved for retirement is already $7.7 trillion!

What is myRA?

myRA planMyRA is an attempt to help ward off the zombies.

To summarize myRA, it’s basically a post-tax retirement account (similar to a Roth IRA) that invests in the Thrift Savings Plan (TSP) Government Securities Investment Fund (eligible to federal employees) – aka the “G Fund” – which is a U.S. Treasury savings bond. Investment returns in the G Fund have averaged 3.19% over the last 10 years and has more than doubled the rate of inflation over the last 30 years.

You can then transfer over your myRA to a private-sector Roth IRA at any time or automatically when the account reaches 30 years old or $15,000 (whichever comes first).

Principal protection is big part of the appeal. The myRA site promises that your account balance will never go down in value. The security in the account, like all savings bonds, will be backed by the U.S. government.

myRA Contribution & Income Limits

MyRA is a form of Roth IRA, so it shares the cumulative annual maximum IRA contribution limit. For 2016, total annual contributions to all your IRAs combined cannot exceed $5,500 per year (or $6,500 per year if you are age 50 or older). It is also eligible for the Saver’s Credit.

Additionally, there is a lifetime contribution limit and account age to myRA. 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.

The goal of the myRA plan is to make saving for retirement more accessible to those who don’t have access to a 401K. It is open to just about anyone, but there are some contribution income limits that if you are above, you cannot contribute for that year. For 2015:

  • $131,000 if single, head of household, or married filing separately
  • $193,000 if married filing jointly

If you’re above those levels of income, odds are that you probably have a retirement plan already and aren’t the right audience for myRA.

Starting a myRA Account & Funding it

To open your account, go to and select the “Sign up” option to start.

Once your account has been created, there are 3 ways that you can fund it:

  • From your paycheck (similar to a 401K): You can set up automatic direct deposit with your employer.
  • From a checking or savings account: you can set up recurring or one-time contributions.
  • From your federal tax refund: when you file taxes, you can direct all or part of your federal tax refund to your myRA account.

You’ll need the following information to get started:

  • Social Security number or Individual Tax Identification Number (ITIN)
  • Driver’s license, state ID, U.S. passport, or military ID
  • Name and birth date of at least one beneficiary

myRA Benefits

There are some solid benefits to myRA:

  • Fees: no account management, maintenance, or other fees.
  • Easy to contribute: initial investments could be as low as $25 and contributions that are as low as $5 could be made through automatic payroll deductions.
  • Tax-advantaged: you put in after tax dollars (like a Roth IRA). Retirement withdrawals would be tax-free.
  • Principal protection: how many who save money let their money just sit there and erode with inflation because they are scared to invest or don’t know how to? With myRA, the funds are automatically invested in the bond funds – there’s no thought involved – and no risk to losing money, as the investment is government backed.
  • Portability: your account can travel with you from one employer to another and you can roll it in to a private IRA, at a later time, if you’d like.
  • Ability to Withdraw: As with a Roth IRA, contributed funds can be withdrawn at any time (I suppose this could be viewed as a bad thing too). However, withdrawn earnings are subject to the standard Roth IRA early withdrawal taxation and penalty rules.

myRA Downsides

There are a few things that are limiting, at best, with the myRA:

  • Contribution cap: participants could save up to $15,000, or for a maximum of 30 years. If the goal is to make retirement more accessible to everyone, why cap savings at $15k before switching over to a more risky private sector account?
  • Limiting Returns: investors who are more comfortable with risk (and if you’re in Gen X or Y, you should fall in to this category) could achieve significantly higher returns by investing in the broader market, versus myRA.

Should you Open a myRA Account?

I’ve grown to be quite a big fan of myRA because it is a retirement account that offers principal protection and no fees. It can basically serve as a complement to Social Security and 401K/IRA funds, all while comfortably outpacing inflation.

I only have one problem – why the heck does the treasury want to limit a good thing to $15k in savings? It’s almost as if they are looking at the account as a bridge to bigger/better savings (which, as a country, we’ve shown we can’t do). What happens when people hit the very low $15k bar? They move over to a Roth where they lose all their money in risky investments and give up on retirement saving altogether?

For those who have no idea how to get started investing, myRA is a well-suited beginning. And even for those who are already investing, having no-fee access to the U.S. G Fund and it’s guaranteed inflation-beating returns is an excellent complement.

It’s a small step in the right direction, but still a very small piece of a much bigger and challenging retirement puzzle.

myRA Discussion:

  • What’s your take on the myRA?
  • Will you contribute to the plan?
  • Would you like to be able to continue contributing to the plan after the $15k lifetime limit?

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About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 10,000+ others by getting FREE email updates. You can also explore every post I have written, in order.

  • Ted says:

    To answer your question of “why the heck does the treasury want to limit a good thing to $15k in savings?,” the answer is because Treasury wants more tax revenue. And always remember, nothing prevents the government from one day saying “you know what? Never mind. Gains are going to be taxable after all.” That’s what our President proposed with 529s (and later backed away from). All of that said, I think myRA is a good thing.

  • Matt M says:

    Correct me if I’m wrong, but couldn’t this type of account be a good candidate for an emergency fund? It has a higher average interest rate than any savings account out there, won’t lose value, and allows for easy withdrawal of principal. Are there any downsides I’m missing? 15 grand is a tiny cap for retirement, but could be enough for an emergency fund.

    • G.E. Miller says:

      Remember, the contribution is cumulative over all IRA’s. If you were not going to save in an IRA otherwise, then I don’t think this is a bad idea. However, the goal should be to have an emergency fund AND save as much for retirement as you can.

    • John S says:

      Way to go! We already started the myRA emergency fund concept for myself and my wife. We have never used our emergency funds so we are transferring money up to the IRA-Roth IRA annual limit.

      So instead of 0.9% at another institution we earned 2.125% for Nov 2015. I already withdrew some money out to test the response and it happened 1 business day later, but I didn’t see it until the 2d business day. Comerica says up to 3 business day.

      Bottom line. It will work but you must understand you are using your Roth IRA allotment for a non-retirement purpose, so you should assess your own situation first. Like GE says if you are not using your IRA annual contribution you could do this. Alternatively, if you were already contributing to a IRA or Roth IRA, you could increase your 401k contributions if not already maxed out.

      The myRA online, phone service representatives, app, etc. all run just like a normal financial business: to me equal or better, and I have called many times before I recommended it to others in our company. We even sponsored doing payroll deductions and announced before the end of the year.

  • Kyle says:

    Does anyone know if myRA also has the requirement of making contributions only from “eanred income” (e.g. W2 forms). If it has the same contributions cap as normal ROTH IRAs, I thought it might have that same restriction but haven’t seen anything.

    • G.E. Miller says:

      from the FAQ’s:

      myRA, like other IRAs, requires that you (or your spouse, if married filing jointly) have “earned income” (also known as qualifying taxable compensation) to be eligible to contribute. Rental income or pension and annuity income are not considered qualifying “compensation” for purposes of making contributions to an IRA. For more information on the types of “compensation” that allow you make contributions to an IRA, including a myRA, see below.
      Compensation for Purposes of an IRA

      (from IRS Publication 590-A (2014), Individual Retirement Arrangements (IRAs)):

      Wages, salaries, etc.
      Self-employment income
      Alimony and separate maintenance
      Nontaxable combat pay

      Does not include…

      Earnings and profits from property
      Interest and dividend income
      Pension or annuity income
      Deferred compensation
      Income from certain partnerships
      Any amounts you exclude from income

  • Jan says:

    Can you have both a Roth IRA and a MYRA? I’ve had a roth for several decades already. I am always looking for non-taxable income vehicles. *I like your HSA article).


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