Washington Post: Starter Savings Accounts: Obama’s ‘myRA’

Hoping to get more people to save for retirement, President Obama announced in his State of the Union address this week that he’s authorized the Treasury Department to come up with a starter savings account, dubbed “myRA.”

During a conference call with media, senior administration officials laid out some of the details of the new account.

President Obama visited the U.S. Steel Irvin Plant in West Mifflin, Pa., Wednesday to promote his State of the Union proposals to boost personal finances of low-wage workers.

President Obama visited the U.S. Steel Irvin Plant in West Mifflin, Pa., Wednesday to promote his State of the Union proposals to boost personal finances of low-wage workers.

 

— It will be set up like a Roth IRA but is similar to a savings bond and, like savings bonds, will be backed by the U.S. government. That means people’s principals will be protected and can’t go down in value. Other key features:

— People would contribute after-tax dollars. It could take as little as $25 to open an account, and contributions could be as low as $5.

— Contributions can be withdrawn tax-free at any time.

— No fees.

— The retirement savings accounts will be offered through employers via payroll deductions. The target savers are people who don’t have access to workplace retirement savings plans.

— People will earn interest at the same variable interest rate as the federal employees’ Thrift Savings Plan (TSP) Government Securities Investment Fund.

— There will be an income limit. Only households earning up to $191,000 a year will be eligible for the account.

— These accounts will be offered through an initial pilot program.

“Let’s do more to help Americans save for retirement,” Obama said in his address. He also touched on a number of other financial issues.

On the Economy: In an effort to get more Americans back to work, Obama said, he wants “to close those loopholes, end those incentives to ship jobs overseas, and lower tax rates for businesses that create jobs right here at home.”

On minimum wage: Obama said he was using his executive power to raise the minimum wage to $10.10 per hour for workers on new government contracts, reports Zachary A. Goldfarb of The Washington Post.

On equal pay for women: One of the best lines of the night came when Obama was talking about workplace polices that make it hard to parent. A woman should be able “to have a baby without sacrificing her job. A mother deserves a day off to care for a sick child or sick parent without running into hardship. And, you know what? A father does, too.”

Then came the line of the evening: “It is time to do away with workplace policies that belong in a ‘Mad Men’ episode.” You don’t need to watch the AMC show about an advertising agency set in the 1960s to get the point. But it helps.

Color of Money Question of the Week

Continue reading here: http://www.washingtonpost.com/business/economy/starter-savings-accounts-obamas-myra/2014/01/30/00600ec0-8930-11e3-a5bd-844629433ba3_story.html

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