U.S. Treasury Building

Contributions to the Treasury Department’s MyRA program can be made through direct deposit from a paycheck or a banking account. Treasury Secretary Jack Lew said the department is emphasizing the program in hopes that people will use some of their tax returns to begin saving for retirement. (J. David Ake / Associated Press)

Sarah D. Wire
March 11, 2016

A recent study shows nearly half of California workers don’t have a retirement savings plan available at work, and the U.S. Treasury Department is hoping a new no fee, no minimum deposit retirement saving program will fill the gap.

Treasury Secretary Jack Lew met with reporters Friday to highlight the Department’s myRAprogram, which President Obama unveiled in 2014. Implementation of the program began in late 2015.

“We want to get people started, because the earlier people start saving, the more they will put aside, the more prepared they’ll be,” Lew said.

The plans are designed so that people can contribute whatever amount they can afford each month and can get the money back at any time without a fee or penalty.

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The accounts are capped at $15,000 and are backed by the Treasury Department.

“There’s no minimum balance, there’s no minimum deposit,” he said. “You can do $5 a pay period. You can do it in a number that suits your ability to take money and put it aside.”

Contributions can be made through direct deposit from a paycheck or a banking account. Lew said the department is emphasizing the program in hopes that people will use some of their tax returns to begin saving for retirement.

The interest earned on money in a myRA account can be taxed when money is withdrawn, but the principal is not.

Lew stressed that the program isn’t a replacement for an employer-backed retirement account, private investments or IRA accounts.

“It’s really not meant in any way to compete with commercial retirement products,” Lew said. “It’s really designed for people who don’t have access at the workplace and are too small to really fit into the current marketplace. We hope that people graduate out of myRA.”

Since the myRA program began late last year, about 10,000 people have signed up, with a median monthly contribution of $50, myRA Executive Director Richard Ludlow said.

The department expected the bulk of participants to be young, Ludlow said, but those signing up have ranged from those just entering the workforce to people who are approaching retirement.

“A lot of people are trying to play catch up,” Ludlow said.

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