Roth IRA the model for Obama's contractor retirement plan
Roth IRA is the basic model for 'myRA,' Obama's proposal to help Americans save for retirement. Like a Roth IRA, contributions to the plan would be made with after-tax dollars, but the initial investment wouldn't be as steep.
Washington — President Barack Obama is promoting his newly unveiled plans to boost wages for some workers and help Americans save for retirement — no action from Congress necessary.
Obama on Wednesday was to flesh out the details of measures he says will help restore a lost sense of economic opportunity in the U.S. In his State of the Union address Tuesday night, Obama urged Congress to act in tandem but vowed he would circumvent Congress wherever he could during his final years in office.
A steel plant near Pittsburgh and a Costco wholesale store in suburban Maryland were the venues for Obama to tout the new measures Wednesday. Vice President Joe Biden was to amplify Obama's message with a round of television interviews and a speech at a community college in New York state.
It's a tradition for presidents to travel after delivering their annual address to Congress, pitching grand legislative goals for the year ahead. But this year, facing a Congress consumed more by midterm politics and gridlock than a hunger to advance his agenda, Obama was carrying a more modest set of executive actions as he prepared for the two-day trip.
Treasury Secretary Jacob Lew will be on hand at a U.S. Steel Corp. plant in West Mifflin, Pa., as Obama directs the Treasury to create a new savings program geared toward those whose employers don't offer retirement plans — about half of all U.S. workers, according to the White House.
The idea is to offer a "starter" account to let people start saving even if they can't afford the large initial investment often needed for a private, commercial retirement account. Savers can start with just $25, and could opt to have contributions of as low as $5 deducted automatically from their paychecks.
Dubbed "myRA," the program will operate like a Roth IRA, so contributions to the plan will be made with after-tax dollars. That means account-holders could withdraw the funds at any time without paying additional taxes. The funds would be backed by U.S. government debt, similar to a savings option available to federal employees.
Initially a pilot program, the accounts should be available through some employers by the end of 2014, the White House said. Investors can keep the accounts if they switch jobs or convert them into private accounts.
Obama is also preparing to sign an executive order raising the minimum wage for workers carrying out new federal contracts to $10.10, up from the current $7.25. Although the measure will only help a limited number of people, it's intended to boost Obama's repeated call for Congress to raise the federal minimum wage for all workers to $10.10.
The stop at a Costco in Lanham, Md ., will also give Obama an opportunity to highlight efforts that many states are undertaking to try to improve wages for their workers. Maryland's Democratic governor is pushing to raise the state's minimum wage to $10.10.
On Thursday, Obama will visit a General Electric gas engines facility in Waukesha, Wis., not far from Milwaukee. He'll also speak at a high school in Nashville, Tenn.