In his 2014 State of the Union address, President Obama announced that he was directing the Treasury Department to create “myRA”—a government-backed affordable “starter retirement savings account that will help millions of low- and middle-income Americans begin to save for retirement.”
The myRA accounts, which will resemble hybrids of old-fashioned savings bonds and modern individual retirement accounts, will be initially offered through employers. Employees will contribute to their myRAs through payroll deductions.
Targeted toward workers who currently lack access to workplace retirement savings plans, myRAs will allow initial investments as low as $25 and contributions as low as $5. Participants will be able to save up to $15,000, or for a maximum of 30 years, in their myRAs before transferring balances to private-sector Roth IRAs.
According to a White House statement, “The accounts are little to no cost and easy for employers to use, since employers will neither administer the accounts nor contribute to them.”
Details on how employers will handle payroll deductions have not yet been released.