Less than two years after the Obama administration rolled out a myRA, a savings program aimed at helping the millions of Americans without access to a retirement plan through work, the Trump administration is killing it.
The Treasury Department announced Friday that it would wind down the program after finding that it was not cost effective. The department said that demand for an investment in the program has been “extremely low,” while it has cost the government nearly $70 million to manage it. At the end of last year, only about 20,000 people had opened myRA accounts.
The government said that the program was unneeded because the private sector already offers safe investment opportunities without account maintenance fees and no minimum balance.
The accounts have long had detractors. While critics supported the goal of encouraging people to save, they disliked the limited investment options offered by the accounts.
Low-income savers who have an existing myRA would likely benefit from transferring their balance to a Roth IRA. “The myRA was intended to be a stepping to stone to the Roth IRA anyway, and account transfers were required once they hit $15,000” says Arielle O’Shea, retirement and investing specialist with NerdWallet. “This just means that transfer needs to happen now.”
Consumers making the transfer should roll their money directly into a Roth IRA, rather than making a withdrawal from the account, which could trigger tax penalties. Consumers should also set up automatic transfers to the account to mimic the paycheck deferrals offered by myRA, O’Shea says.