The Treasury Department announced July 28 that it will begin winding down the myRA program. Treasury’s action, which will end the program started in 2014, comes after a review of the program and its cost-effectiveness.
U.S. Treasurer Jovita Carranza said in a press release that Treasury will be phasing out the program "over the coming months."
Treasury said that a thorough review of the myRA program, which has cost $70 million to administer since it was instituted, found that demand for myRAs has been extremely low. “The myRA program was created to help low to middle income earners start saving for retirement. Unfortunately, there has been very little demand for the program, and the cost to taxpayers cannot be justified by the assets in the program,” Carranza said.
Participants in the program have contributed $34 million to their accounts. Currently there are approximately 20,000 myRA accounts with a median balance of $500, and an additional 10,000 accounts with no money in them. If the program had continued, it would have cost taxpayers approximately $10 million a year to manage the program.
Carranza also expressed confidence that in the absence of the program, those whom it was intended to serve were not going to be left in the lurch. “Fortunately, ample private sector solutions exist, which resulted in less appeal for myRA,” she said. Treasury further argues that the private sector offers options that do not incur account maintenance fees, require no minimum balance, and provide safe investment opportunities.
The Treasury Department will not be abandoning participants, Carranza indicated, saying, “We will be communicating frequently with participants to help facilitate a smooth transition to other investment opportunities.” Treasury reports that participants are being notified, and that this communication includes information on how to move the money in their myRAs to another Roth IRA.
The myRA program administrators have set up a set of Q&As to help in the transition. In an email about the program’s suspension, they also included suggestions regarding steps employers and organizations can take, including:
- If you receive questions from myRA account holders, refer them to myRA.gov, where they will find the most up-to-date information and resources.
- If you are an employer, prepare to stop — at the employee’s request — instances of direct deposit saving into myRAs.
- Update or remove references to myRAs on your organization’s website and in your educational, informational and onboarding materials.
“We are committed to promoting retirement savings, and, as Treasurer, I plan to devote a substantial amount of my time to ensuring more Americans have the tools and knowhow to save for retirement,” said Carranza.
