Your thoughts: myRA program

[Aitrus]

So I've been looking into the myRA program that the Treasury Dept. is setting up. I know what my thoughts are on it, but I'm curious as to what the community here thinks of it. Comments about it are welcomed and encouraged.

My take: It's a nice idea, but I don't know if implementation and management via tax dollars is ethically or morally copacetic. If it's still around when my kids start working, I might advise them to use it for their summer jobs.

For those that don't know what the program is, here's a brief rundown:

1. Anybody can put money into it so long as their employer doesn't already have an investment plan of some type available. You have to be employed and working to use this program.
2. Maximum annual income limit on using the program is $131,000, or $193,000 if married and filing jointly.
3. Maximum annual contribution of $5,500 or $6,500 if over 50. No monthly contribution limits as far as I can tell.
4. Funds are paid after-taxes akin to a Roth contribution.
5. Able to withdraw contributed funds at any time tax and penalty free.
6. Able to withdraw interest funds at any time, with taxes / penalties applied to only that amount.
7. No account fees of any kind.
8. Once you reach $15,000 in the account, or have invested for 30 years, you must roll it over to a Roth IRA.
9. The funds are invested in the same Treasury-backed government securities as the G Fund. This is the only option for the program.

Source: https://myra.treasury.gov/

[crondanet5]

So that's why they want to lower the interest rate on the G Fund?

[Aitrus]

Possibly.

[ArrieS]

When I first heard this, I thought it was just another attempt to increase the amount of money in the G fund that the Government can use to fund itself. My thoughts haven't changed.

I'm just surprised they limit the amount and force you to roll it over.

[chief04010]

I may be missing something, but why not just open a Roth IRA and make contributions?

[Aitrus]

From the myRA website, there's no minimum monthly contribution, and no fees. You can put in as little as $1 a month if you want. Maybe that's why they made this - to encourage at least some savings at some level.

It seems to me like it's a Roth IRA with training wheels.

[wwwtractor]

Why would anyone want to invest in something returning less than the rate of inflation?

[CSI]

For the Remocrats and Depublicans it's a win, win to pay taxes on money they can confiscate.

[wwwtractor]

This:
Year # of Allocations YTD Return (?)
2008 0 Allocation Change +3.75%
2009 0 Allocation Change +2.97%
2010 0 Allocation Change +2.81%
2011 0 Allocation Change +2.45%
2012 0 Allocation Change +1.47%
2013 0 Allocation Change +1.89%
2014 0 Allocation Change +2.31%
2015 0 Allocation Change +0.57%

Versus this:
Year # of Allocations YTD Return (?)
2008 0 Allocation Change -36.99%
2009 0 Allocation Change +26.68%
2010 0 Allocation Change +15.06%
2011 0 Allocation Change +2.11%
2012 0 Allocation Change +16.07%
2013 0 Allocation Change +32.45%
2014 0 Allocation Change +13.78%
2015 0 Allocation Change +2.48%

You decide!

Looks like the old I fund finally had a good day. I look forward to many more soon.

Russ Koesterich, global chief investment strategist at BlackRock, the world’s largest asset manager with more than $4 trillion under management, in a recent editorial in the Financial Times recommended reducing allocation to U.S. equities in favor of international markets that are less expensive.