Nov 05, 2015 04:17 AM EST
The U.S. federal government has launched a retirement savings program called myRA. The program was first announced by President Obama in his 2014 State of the Union address.
The myRA is launched for the roughly 55 million of American citizens who don't have access to 401(k) at work or don't have enough money to meet the minimum balance to open other savings plan.
The U.S. Treasury Secretary Jacob J. Lew stated in his announcement, as reported on Time, that myRA is a cheap, convenient, and risk-free way for people who otherwise wouldn't be able to stock some money away for their retirements.
According to USA Today, 31% of non-retirees don't have any retirement savings because they don't have enough money to set aside for savings.
But with the myRA program, any American whose earnings are less than $131,000 a year or $193,000 if they are married and filing taxes jointly will be able to start saving money for their retirement in the government-backed account.
The myRA program has been tested by the U.S. government for a year by running a pilot phase with 60 employers, according to Forbes. The official wanted to make sure it was simple and as user-friendly as possible.
The starter accounts of myRA cost nothing to open, no fee, no minimum balance, and savers can contribute as little as a dollar. The program is structured like Roth IRA, savers put the money after tax so their account grows tax-free after that.
For the comparison, other retirement accounts commonly require minimum balances of $1,000 or $2,000.
To put the money in myRA accounts, according to CNN Money, the savers can transfer directly into myRA if their employers offer direct deposit. The savers can also link the myRA with their savings account and schedule one-time or regular contribution. The myRA account can also be donated from federal tax refunds.
Savers can donate up to $5,500 a year or $6,500 if they are over 50 years old or will turn 50 before the end of 2015. The savers can withdraw the money they put in without a penalty at any time.
The savers can save up to $15,000 in myRA accounts. When savers have accumulated that amount, they will be encouraged to roll it over another account because they will easily meet the minimum balance threshold.
The money saved in the myRA account is invested in a super-safe U.S. Treasury Securities Fund that recently earned about 2%.
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