Treasury Department Kills Obama’s Retirement Savings Plan
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Treasury Department Kills Obama’s Retirement Savings Plan

The myRA Progam Never Really Took Off; $70 Million in Costs for Just $34 Million Saved

The Treasury Department is killing off a starter retirement savings program for people without work-based retirement accounts that was launched under former President Barack Obama.

Billionaire Treasury Secretary Steven Mnuchin, known by some as the foreclosure king, oversees the department which is ending the myRA program that let people start retirement accounts with as little as $25. The program didn’t have the risk or fees of Individual Retirement Accounts offered by commercial investment firms.

“This is yet another way Republicans seem to be siding with the retail financial management industry against people who want a secure and effective way to save,” said labor economist Teresa Ghilarducci.

U.S. Treasurer Jovita Carranza said there was very little demand for the program. MyRA has cost nearly $70 million and was expected to cost about $10 million a year, about the expense for the military and U.S. Coast Guard to protect Mar-a-Lago for 10 visits by Trump.

“The cost to taxpayers cannot be justified by the assets in the program,” Carranza said.

ACTION BOX / What you can do about it

Holders of myRA accounts will need to either roll over their accounts to Roth IRAs or close the accounts. Go to the site or call the customer support line at 855-406-6972.

Call Treasury Secretary Steven Mnuchin and U.S. Treasurer Jovita Carranza at 202-622-2000 or write them at Department of the Treasury, 1500 Pennsylvania Avenue, NW, Washington, DC 20220.

Or tell Mnuchin your opinions by Twitter.

Contact your senators and representative.

Obama announced the program in 2014 during his State of the Union address. About 55 million Americans don’t have access to a workplace retirement plan.

Investors could use payroll deductions or deposit money from their personal checking or savings accounts, or from federal tax refunds. The money, managed by Comerica Inc., a Dallas-based bank, is invested in Treasury securities.

The most people could save with a myRA is $15,000. Credit unions, banks and thrifts could not offer myRAs.

The American Bankers Association has spent about $5.6 million on federal lobbying so far this year. The Independent Community Bankers of America has spent about $2.7 million.

MyRA accounts were for people with annual incomes of less than $129,000 a year for individuals and $191,000 for couples. The maximum annual contribution was $5,500 or $6,500 for people 50 and older.

The starter accounts became available at the end of 2015. Since then, about 20,000 accounts have been opened, with participants contributing a total of $34 million, according to the Treasury; the median account balance was $500. An additional 10,000 accounts whose owners have not contributed to them have been opened.

The low participation rate mirrors retirement saving overall.  The Government Accountability Office has found that almost half of all households with Americans age 55 and older have no retirement savings.

In December, the Treasury Department said it would do more to promote myRA on government websites and through TurboTax.

“The future of myRA is very bright,” David John, an adviser at the AARP Public Policy Institute, said at the time.

Killing off myRA isn’t the only action the Trump administration and Republicans have taken to benefit banks and private investment firms such as Goldman Sachs where Mnuchin was once a partner. Trump and the Republican Congress used the Congressional Review Act to undo Obama regulations that helped states, counties and cities set up automatic retirement programs for small business workers.

Jack Towarnicky, executive director of Plan Sponsor Council of America said myRA was probably a success for the 20,000 people who signed up.

“Many saved monies that they might otherwise have spent,” Towarnicky said.

Featured Photo: President Barack Obama signs a memo creating myRA accounts on January 29, 2014, in a Pittsburgh area steel mill (White House Flickr account).

August 1, 2017