A guide to one retirement savings plan option.
In November 2015, the Treasury Department launched myRA. This is a safe, simple and affordable way to open a starter retirement account for those who do not have access to an employer-sponsored retirement plan.
Following are a few facts that will help you determine whether myRA is right for you:
- Accounts are open to those who have annual earned income below $132,000 if single, head of household, or married filing separately, or $194,000 if married filing jointly.
- Account owners can save up to $15,000 over a period of 30 years. Once this limit is reached, savings will have to be rolled over to a Roth IRA.
- An account will earn interest at the same variable rate available to federal employees for their retirement accounts and follow the same rules as a Roth IRA.
- Accounts are portable and not tied to a single employer, meaning if you switch jobs, you can continue to contribute to your myRA account.
- Opening a myRA account costs nothing, and you can contribute an amount that fits your budget, as long as it’s within contribution limits (individuals can contribute up to $5,500 to all of their IRAs).
- Account owners can withdraw contributions without paying tax and penalties.
- Like a savings bond, plan funds can’t lose value and will increase over time.
Participants can fund their accounts through a:
- Payroll deduction. Set up automatic direct deposit contributions through an employer.
- Checking or savings account. Fund directly by setting up recurring or one-time contributions from a checking or savings account.
- Federal tax refund. Direct all or a portion of a federal tax refund to your myRA account.