MyRAs now available nationwide

MyRA, the new retirement savings account intended for people with taxable compensation income but who lack access to an employer-sponsored retirement plan, was launched nationwide in November with an announcement by Treasury Secretary Jack Lew.

The accounts are “designed to remove common barriers to saving, and give people an easy way to get started,” Lew said in a release.

The program, which completed an initial pilot phase, was first announced by President Barack Obama in his 2014 State of the Union speech. Eligible individuals may learn more and apply online at myra.gov.

A myRA (my Retirement Account) is a government-sponsored Roth IRA. Accounts hold only one type of investment, a new Treasury security earning the same variable interest rate paid by the Government Securities Investment Fund (G Fund) in the Thrift Savings Plan for federal employees. More information on the G Fund’s performance is available on the Thrift Savings Plan website at tsp.gov. No fees apply.

The accounts have the same contribution limits and withdrawal rules as private-sector Roth IRAs. Thus, for example, single individuals must have an adjusted gross income below $131,000, or married couples filing jointly no more than $193,000 (the top of the phaseout range under Sec. 408A(c)(3), as adjusted for inflation for 2015). Contributions for 2015 may not exceed the lesser of $5,500 (plus a $1,000 catch-up contribution for individuals 50 years of age or older) or 100% of compensation.

However, unlike private-sector Roth IRAs, myRAs may attain a lifetime balance of no more than $15,000 and may be held no more than 30 years from the date they are opened (the value and maturity of the special Treasury bond). When the earlier of either event occurs, a transfer to a private-sector Roth IRA is mandatory, and a transfer may be made at any time previously. 

Individuals may set up automatic paycheck direct deposits to a myRA through their employer; fund one by direct, one-time, or recurring contributions from a checking or savings account; or direct all or a portion of their federal income tax refund to it.

According to frequently asked questions at myra.gov, contributors to an account are not required to report contributions or earnings to the IRS on federal tax forms, but the IRS and taxpayers will receive Form 5498, IRA Contribution Information, reporting them from Comerica Bank, the trustee custodian financial institution. For otherwise eligible taxpayers, contributions count toward the “saver’s” tax credit for qualified retirement savings contributions.

• Treasury news release (Nov. 4, 2015) (available at treasury.gov)

—By Paul Bonner, a JofA senior editor.