It’s now possible to offer your employees a secure retirement savings account at no cost to you. The federally insured myRA program that President Obama announced in his 2014 State of the Union address is now accepting enrollees.
The program is modeled after Roth individual retirement accounts, in which employees contribute after-tax dollars now, with the ability to withdraw earnings tax-free when they retire. Employees can also pull out myRA funds before they retire without incurring tax penalties.
Envisioned as “starter” plans for employees who don’t have access to employer-provided retirement benefits, myRA accounts are backed by the government and don’t charge administration fees. Employees can contribute as much as $5,500 per year, up to a maximum balance of $15,000.
Funds are invested in a risk-free U.S. Treasury security pegged to federal bond rates. No one will get rich on annual interest rates that will probably run between 2% and 5%. With an average interest rate of 3%, an employee who invests $150 per month would have a balance of $10,000 after five years. Still, it’s an easy way for your employees to start saving for retirement.
Learn more about helping employees enroll.