State of the Union: What's a MyRA?

On Wednesday, the Obama administration will launch a retirement savings vehicle called "myRA," aimed at enrolling more Americans in a government-backed investment option. MyRA would be similar to a Roth Individual Retirement Account, but backed by the U.S. government securities.

By , Reuters

The Obama administration is scheduled on Wednesday to launch a retirement savings vehicle called "myRA," aimed at enrolling more Americans in a government-backed investment option.

In details provided by the White House on Wednesday, the retirement savings proposal would be similar to a Roth Individual Retirement Account, but with holdings backed by the U.S. government like savings bonds.

"MyRA guarantees a decent return with no risk of losing what you put in," President Barack Obama said in introducing the program on Tuesday night in his State of the Union Speech.

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Those accounts would be available to households earning no more than $191,000 a year. Businesses will need to register in the pilot program by the end of the year for their employees to participate voluntarily.

Investors would earn a variable interest rate equal to the Thrift Savings Plan, or TSP, which is available to federal employees. Contributions could be withdrawn tax-free at any time.

Initial investments could be as low as $25, and contributions as small as $5 could be made through payroll deductions.

Participants could save up to $15,000, for a maximum of 30 years, in their accounts before transferring their balances to a private-sector Roth IRA.

About half of all workers and 75 percent of part-time workers lack access to employer-sponsored retirement plans, the White House said.

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