Obama To Set MyRa Retirement Plans In Motion
January 29, 2014 by UPI - United Press International, Inc.
WASHINGTON, Jan. 29 (UPI) — The White House Wednesday unveiled the “myRA” retirement savings option for U.S. workers.
In his State of the Union message Tuesday, President Barack Obama said most workers “don’t have a pension. A Social Security check often isn’t enough on its own. And while the stock market has doubled over the last five years, that doesn’t help folks who don’t have 401[k]s.”
The White House said Wednesday the new savings option would allow workers to buy 30-year bonds with modest contributions.
“What it is, is it’s a new type of savings bond that we can set up without legislation, that encourages Americans to begin to build a nest egg, and it’s simple,” Obama said at a U.S. Steel plant in West Mifflin, Pa.
“These account balances will never go down in value. They’re backed by the full faith and credit of the United States government. And it’s affordable,” he said.
Initial investments could be as low as $25 and contributions as as low as $5 could be made through “easy-to-use payroll deductions,” the White House said.
“We want every American who works hard and takes responsibility to retire with dignity after decades of honest work,” the President said.
The funds can be moved to IRA accounts without penalty, the White House said, describing the accounts as “starter” retirement accounts available to middle income households with earnings of less than $191,000 per year.
The savings will earn interest at the same variable rate that applies to the Federal employees Thrift Savings Plan Government Securities Investment Fund.
The plan does not include an employer contribution, and workers’ participation is not mandatory.
“Workers would not be required to contribute and are free to opt out. Employers would also not contribute,” the White House said, noting workers could save up to $15,000 or for 30 years. If workers hit the cap, the funds could be transferred to a private Roth IRA.
The plan, the White House said, aims to provide more Americans with a “dignified retirement.”
At this point, about 50 percent of all workers and 75 percent of part-time workers have no access to employer-sponsored retirement plans, the White House said. In addition, “while financial markets have returned to their pre-crisis levels, median household wealth has only recovered 45 percent of the losses during the recession,” the White House said.
In his State of the Union address, Obama said he would push policies forward to advance his agenda using executive orders that do not require congressional approval.
“While Social Security is and must remain a rock-solid, guaranteed progressive benefit that every American can rely on, the most secure retirement requires a three-legged stool that includes savings and pensions. That’s why the president is using his executive authority to create the myRA,” the White House said.