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The Treasury Department is discontinuing the Obama administration’s retirement savings program that aimed to help workers save for retirement if they didn’t have access to a workplace account.
The announcement comes after a recent push by Democratic lawmakers, including Sens. Patty Murray (Wash.) and Ron Wyden (Ore.), urging Treasury to continue the program. They cited the recent scrapping of the Labor Department’s rules giving safe-harbor protections to state- and city-run retirement savings programs for private sector workers who lack a work-sponsored retirement plan. Earlier this year, Congress passed—and President Donald Trump signed into law—resolutions to nullify the state program rules that were issued by the Obama administration.
“Retirement security is a long-term issue and the myRA was designed as a long-term investment in improving retirement security,” J. Mark Iwry, former senior adviser to the Treasury secretary and deputy assistant secretary for retirement and health policy, told Bloomberg BNA July 28. Iwry was the principal architect of the myRA program.
“The decision to cancel the program in its introductory phase is based on a misunderstanding of its purposes and potential as a long-term investment in saving by working families,” Iwry said.
Treasury announced on July 28 that the myRA program will no longer accept new enrollments because it wasn’t cost-effective. Current accounts will stay open and accessible for now, according to the myRA website. The myRA account, which was proposed by President Barack Obama in his 2014 State of the Union address, essentially functioned like a Roth individual retirement account, with after-tax money being contributed.
This is the third Obama administration retirement-related initiative that the Trump administration has tried to ax or soften, along with the state- and city-run retirement savings program regulations and the DOL’s fiduciary rule.
The myRA starter accounts were designed to “help fill a niche in retirement saving by providing a vehicle for deposits, largely by new savers, that may be too small to be of interest to most commercial financial institutions that offer IRAs,” Iwry said of the program in 2014.
At the end of 2016, just 20,000 myRA accounts had been opened, with assets of about $17 million.
Unlike other Obama administration retirement initiatives, some in the financial services sector supported the myRA accounts. The accounts were intended to accrue up to $15,000, an amount that could then be transitioned into a private-sector IRA.
Treasury said that myRA account holders are being notified of the changes and will be given information that includes moving their myRA savings to another Roth IRA.
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