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A New Way to Save - myRA

Date: 2/1/2017

Author: Financial Hotline

myRA (my Retirement Account) is a way to start saving for your future developed by the United States Department of the Treasury. myRA is a Roth IRA that invests in a new United States Treasury retirement savings bond, which will not lose money. It was designed for people without access to employer-sponsored retirement savings plans and for people looking for a simple, safe, and affordable way to start saving for retirement. These accounts cost nothing to open, have no fees, and don’t require a minimum amount of savings. In general, Roth IRAs are good for younger savers, who are likely to be in a lower income tax bracket now and will benefit from the tax-free withdrawals later, when they are in a higher bracket. You can withdraw any of the money you have contributed to a myRA without paying taxes or a penalty.

myRA is not intended to replace existing retirement savings options, including employer-sponsored retirement plans. If you are eligible for an employer-sponsored plan, such as a 401(k) plan, saving for retirement in those accounts might include special incentives for saving, such as an employer match.

There are several ways to start funding your myRA account:

- From your paycheck. You can set up automatic direct deposit to your myRA with your employer.

- From a checking or savings account. You can set up recurring or one-time contributions to your myRA from another account, such as your bank or credit union savings or checking account.

- From your federal tax refund. When you file your taxes, you can direct all or part of your federal tax refund to your myRA.

Unlike other Roth IRAs, myRA has features designed to make it a starter retirement savings account. myRA is invested in a single United States Treasury retirement savings bond, which will not lose money and is backed by the United States Treasury. Money that you put in your myRA will earn interest until your account reaches $15,000 or 30 years from the day you first fund the account (whichever comes first). The account balance will then be transferred to a private-sector Roth IRA, where you can continue to invest your savings and make additional contributions. You can also transfer or roll over your myRA to a private-sector Roth IRA of your choice at any time.

myRA accounts earn interest at the same variable rate as investments in the Government Securities Investment Fund in the Thrift Savings Plan for federal employees. These investments earned 2.04 percent in 2015 and had an average annual return of 2.94 percent over the ten-year period ending December 2015. More performance information can be found on the Thrift Savings Plan website. (As with most investments, past performance is not a guarantee of or prediction of current or future performance)

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