Treasury ends myRA low income retirement savings plan

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myRA, retirement, Treasury, savingsThe myRA (“my retirement account”), a savings account designed to help low and middle-income savers put money away for retirement, is being shut down by the U.S. Treasury Department. Citing lack of participation relative to the cost of maintaining the program, U.S. Treasurer Jovita Carranza, stated “The myRA program was created to help low to middle-income earners start saving for retirement. Unfortunately, there has been very little demand for the program, and the cost to taxpayers cannot be justified by the assets in the program.”

According to the myRA website, accounts are still open and investors can continue making deposits. Accounts will continue to earn interest. The Treasury Department will be reaching out to account holders with information regarding next steps and relevant deadlines as well as outlining when they will stop accepting deposits. A myRA with a zero ($0) balance as of September 15, 2017 or later, will be subject to automatic closure on September 18, 2017.

What should you do if you have funds invested in a myRA account?

Direct Rollover. To transfer your balance, open a Roth IRA and ask the new provider to initiate a direct rollover. By using a direct rollover or transfer to move your funds, you avoid withholding and potential tax liabilities that may apply to earnings if funds paid directly to you are not deposited within 60 days of a distribution to a new Roth IRA.

Distribution of your account balance. An alternative to a direct rollover is to take a distribution of your account balance. Because myRA contributions are made after taxes, funds can be pulled out at any time, tax-and penalty free. However, the earnings on the contributions may be subject to taxes and penalties.

If you have any questions about your myRA or any retirement account, contact your accountant.

Lauren J. Sweeney