New “myRA” Workplace Savings Program
In his January 28, 2014 State of the Union address, President Obama outlined a new retirement savings program called “myRA”. Although we do not yet know all the details (the White House has released a fact sheet but more guidance is likely to come), the program aims to provide broad access to a starter retirement savings account for individuals. Set to launch in late 2014, the program will allow individuals to divert a part of their earnings to a retirement savings account. For tax purposes, an individual’s myRA account will likely function as a Roth IRA account. Workers will be permitted to accumulate up to $15,000 in their account, which will be invested in a guaranteed income fund. Importantly, employees who have access to an employer-sponsored retirement plan will also be able to contribute to a separate myRA account.
Early descriptions of the program suggest minimal employer involvement, although it appears that employers will be able to direct employee payroll contributions to employees’ myRA accounts. In particular, small employers who do not currently sponsor a retirement plan may want to communicate this program to employees when more details are known. Details about how an employer may be able to participate in the program should come later this year.