My Retirement Account

What is a MyRA Account?

The MyRA account was announced on January 28, 2014 in President Obama's State of the Union address and created by an executive order. In his speech, he promised an account with a "decent return" that is Federally guaranteed, and it will be interesting to see details given that very few investments with good returns are backed in this way given that interest rates are at historic lows.

MyRA Accounts So far the major details of the My Retirement Account plan are that they will be offered via Roth IRA accounts and will be backed by the Treasury as a kind of "savings bond" but hopefully with a better return than current bonds. Contributions to the MyRA will not be tax deductible, and in the fashion of the Roth this means that retirement deductions will be untaxed. The President says the new product is designed to help people build a "nest egg" and it would seem like the primary audience for the IRA-style vehicle is the working poor and part-time laborers.

Who Qualifies for MyRA?

The My Retirement Account would be available to people who don't have access to 401(k) or other retirement vehicles. The idea is that the account contributions may be as small as $5 a month, and over $15k the account would convert into an IRA without penalty. The overriding principle is that people should get started on a savings plan for retirement and these accounts would make such savings into a habit.

Conspiracy To Seize 401k Accounts?

No discussion of government-backed retirement accounts would be complete without rumors from various parties about a government conspiracy to seize 401K accounts and replace them with an entitlement. Essentially, the action would function as a Cyprus-style "haircut" for people who had taken the time to save and amass money. However, it would be foolish to accuse the government of such a conspiracy, given that conspiracies are defined as agreements to break the law, and if the government wants to seize all of your assets it will simply create a new law (which is old and busted) or write an executive order out of thin air (which is the new hotness.) Why would the government take over 401(k) investments, IRAs, and Roth IRAs? Because there are trillions of dollars in savings that the Treasury can put into its bank account and then claim solvency, which could become ever more attractive when interest rates finally rise and defaulting governments in the East start cashing in all those hot bonds they've been sold. Naturally, the government would guarantee a return on your "transferred" money, such as the current rate of one tenth of one percent.

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