President Obama’s myRA program was put out to pasture by the Trump administration because of high government cost and low participation.
The program was a laudable one it was a program for employees who didn’t have access to a retirement plan at work because their employer wouldn’t sponsor one. Employees who enrolled in myRA would be able contribute up to $5,500 a year, or $6,500 if they were 50 or older. That money could be deducted from their paycheck or they could remit payment to the government for their contributions.
The funds were invested in United States Treasury savings bonds, which paid the same variable rate as the Government Securities Fund, available to federal employees through the government retirement plan. Once a participant’s account balance hit $15,000, then it would be moved to an account that would offer stock and bond investments.
The program wasn’t popular, there were only 30,000 participant and only 20,000 had an account balance. The plan only had $34 million in assets and it cost the Federal government $70 million in expenses since 2014 with an expected $10 million in expenses each year. Only government can spend $70 million in expenses on a $34 million plan.
While people will claim that the Trump administration’s decision will cut retirement access to employees who don’t have one at work, the myRA program was no different than a Roth IRA and offered employees no tax advantage. I’m all in support of increasing retirement plan access, but the way to do is to offer incentive for employers to offer retirement plans. That’s why I still support the idea of open multiple employer plans that will help employers alleviate potential fiduciary liability and cut down on costs that go with small 401(k) plans.
It’s amazing that the Treasury Department under Obama offered quick guidance for the myRA program and State run IRA programs, but haven’t offered any guidance since that Advisory Opinion on that TAG multiple employer plan in 2012. Of course, myRA and state run IRA programs were pushed by the Obama White House and multiple employer plans were not. It’s my opinion that the best route for increased employee coverage under retirement plans is increasing the incentives for employers to offer them and there is no better choice than the open multiple employer plan.
