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By W. Mark Smith, Esq. and Alice Murtos, Esq.
Sutherland Asbill & Brennan LLP, Washington, D.C. and Atlanta, GA
In December 2014, the Treasury Department opened the myRA (my Retirement Account) program to employers and employees. President Obama announced the myRA program in his 2014 State of the Union Address. The program is intended as an introductory retirement savings program for employees who do not have access to a worksite retirement plan.
The program essentially consists of Roth IRA accounts, subject to the usual rules, invested only in a new class of nonmarketable, electronic U.S. Treasury retirement savings bonds that replicate the variable rate of the Government Securities Investment Fund (G Fund) of the Thrift Savings Plan for federal employees. The myRA must be rolled over to a private sector Roth IRA when the balance reaches $15,000 or 30 years after it is opened and first funded, whichever comes first; it may be closed and distributed or rolled over, or withdrawals may be taken, at any prior time.
On December 12, the Treasury issued final regulations authorizing the new retirement savings bond. The regulations permit the setting of minimum amounts for initial and additional contributions to the bond, although no such limits are initially in effect. The maximum annual contribution to the bond is tied to the Internal Revenue Code §408A limits for Roth IRAs.
A Treasury website, myra.treasury.gov is now live. The website provides resources for both individuals and employers to use in connection with myRA accounts. These resources include:
From these materials, it appears that:
On the basis of the program as initially structured, the Department of Labor (DOL) issued on December 15 an information letter concluding that employer involvement with myRA accounts is insufficient to give rise to an ERISA employee benefit plan (absent reimbursement of employee contributions by the employer). The letter implies that future enhancements to the myRA program could affect DOL's analysis.
Guidance on the rollover of myRA balances to private sector Roth IRAs is to be provided in the future.
For more information, in the Tax Management Portfolios, see Kennedy, 367 T.M., IRAs, and in Tax Practice Series, see ¶5610, IRAs.
© 2015 Sutherland Asbill & Brennan LLP.
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