Author Topic: MyRA... hmmmmm...This sounds familiar.......  (Read 7380 times)

nyxst

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MyRA... hmmmmm...This sounds familiar.......
« on: January 30, 2014, 06:32:05 AM »
http://www.cnbc.com/id/101373440?__source=xfinity|mod&par=xfinity


Obama's introducing a new idea!!! It sounds an awful lot like a Roth... hmmm...

Bigote

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #1 on: January 30, 2014, 07:34:15 AM »
It seems like the design of this is targeted at lower income folks who work places that don't offer a 401k and might be disinclined to start an IRA for whatever reason.     

For the more prodigious wealth accumulators of Mushtacheville, it could be useful as a place to get above-market rates on a portion of your emergency fund, and/or another vehicle for backdoor Roths (remains to be seen if that will work). 

But really we need more details to see.

nyxst

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #2 on: January 30, 2014, 07:41:12 AM »
I look forward to more details also...  Like, can I have one of these accounts in addition to my Roth?   I especially like this line... "It will also be easier for your employer to offer these accounts because the government will manage the paperwork and invest the money, saving companies the cost of hiring a plan sponsor".... I am relatively young (33) and I like to think I am not too jaded yet, but that just smells funny.... like, "hey, don't you worry your pretty little head! WE will take care of EVERYTHING for you... snicker snicker..."  haha!

sheepstache

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #3 on: January 30, 2014, 08:14:18 AM »
Oh christ.  I've been following the other thread on this but when you wrote it like that with the capitals I realized they're following that stupid branding trend of calling everything the MySomething or the iSomething or the MeSomething.  Shoot me. 

Cue the ridiculously well-adjusted-looking stock photo people making short, self-centered sentence fragments.

"Retirement savings for my budget.  My way."

"It's what my family needs for today.  And tomorrow."

nyxst

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #4 on: January 30, 2014, 08:52:36 AM »
Oops!  I was looking for another thread about it, but didn't see it anywhere... now I am determined to find it!  Yes, they are selling this to low income people, but that doesn't automatically make them poorly informed people.... I'm pretty sure all people are aware they "should" save money... right?  To attach a gimmicky name to what essentially looks like a Roth to me... I don't know, it just seems a bit offensive.

skyrefuge

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #5 on: January 30, 2014, 09:13:00 AM »
http://www.reuters.com/article/2014/01/29/retirement-myra-idUSL2N0L319820140129

Quote
these accounts will allow Americans...to invest small amounts per paycheck - as low as $5 - in a savings bond-like product....

After an individual accumulates $15,000, the account would roll over into a traditional individual retirement account.

The reason for the $15,000 threshold is that that is the level at which financial institutions break even on investment accounts, said Dallas Salisbury, president and chief executive officer of the Employee Benefit Research Institute.

"They don't want really small accounts," he said, and it doesn't make sense for individuals to pay the fees on accounts with small amounts of money.

That's what differentiates it from most Roth IRA accounts, which means it's not a gimmick. There have been several threads in the past at this very forum where people want to open an IRA at Vanguard, but they don't have the $3000 minimum available to invest. No/low minimum investment is also a major selling point of Betterment, which is often mentioned here.

So there is clearly some demand, even among Mustachians, for tax-sheltered savings accounts with low/no minimums. myRA appears to be the government's attempt to fill that gap.

Also, LOL at sheepstache's dead-on ads.

mlipps

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #6 on: January 30, 2014, 09:19:28 AM »
Everyone has to start somewhere. We can be elitist about it and laugh at the people who think they can only afford $5/paycheck towards retirement, or we can hope that this will start people thinking about retirement planning who were scared off by the complexity and hope that at least a few people who enroll will be put on a better path. I don't see any reason to be such jerks about it.

nyxst

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #7 on: January 30, 2014, 09:34:23 AM »
My intention wasn't to be a "jerk" in any way... I think I fall into that low income threshold actually... (4 people living off of a $45,000/yr income... ugh...) but I still know that I'm supposed to save money...  It is a little offensive to me that they need to repackage it and sell a Roth to me in a shiny new box.. That's all.  I understand that the minimums are lower, but I started a Roth at Schwab with $100 and a direct deposit of $100 per month.. with additional minimums to buy more at $1.00 per investment choice... seems pretty similar

Nothlit

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #8 on: January 30, 2014, 09:43:44 AM »
http://www.cnbc.com/id/101373440?__source=xfinity|mod&par=xfinity


Obama's introducing a new idea!!! It sounds an awful lot like a Roth... hmmm...

My understanding is that it technically *is* a Roth IRA, and so will count against your regular Roth IRA contribution limit. This won't be a way for those who already max out Roth IRA contributions to somehow sneak in a few extra dollars. Also, it sounds like you will only be eligible for a MyRA if your employer doesn't have a retirement program already in place.

the fixer

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #9 on: January 30, 2014, 09:57:16 AM »
nyxstar10a, do you have a retirement plan through your employer? This plan is mostly intended for people who do not. People with poor control over their finances will have a much easier time saving if it's through automated payroll deductions, which can be difficult to set up without such a plan. This is especially true if one is poor and may not even have a bank account.

I acknowledge though that the problem being solved is not "saving for retirement is impossible," rather "saving for retirement is hard!" We view that as just another challenge but people with less self-control over their lives could use the help.

Elyse

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #10 on: January 30, 2014, 10:44:58 AM »
I for one would like to know more.

For example, can I have it in addition to my Roth IRA?  If so, then the guaranteed value protection could make it a decent place to stick an emergency fund.  Make a bit more than a savings account.

It could make it easier for families starting out to have an emergency fund there... then when they have the money to finally be able to have more than the emergency fund, roll over the extra past the $15k in the MyRA to a Roth IRA and start contributing to the Roth IRA at that point. Keep the MyRA slightly below $15k so that it can stay around as an emergency fund.

Have any details come out about this that keeps that use from being positive?

It seems like a pretty decent thing to keep a small emergency fund in if you get to keep it in addition.
« Last Edit: January 30, 2014, 10:53:06 AM by Elyse »

randymarsh

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #11 on: January 30, 2014, 11:06:03 AM »
This could help high school and college kids get started. Most part-time employees aren't eligible for their company's 401k plan and even if they are, you usually have to be 21 to participate. Most 18 year olds won't open a Roth on their own, but they may do a payroll deduction if it's visible.

mlipps

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #12 on: January 30, 2014, 11:37:51 AM »
My intention wasn't to be a "jerk" in any way... I think I fall into that low income threshold actually... (4 people living off of a $45,000/yr income... ugh...) but I still know that I'm supposed to save money...  It is a little offensive to me that they need to repackage it and sell a Roth to me in a shiny new box.. That's all.  I understand that the minimums are lower, but I started a Roth at Schwab with $100 and a direct deposit of $100 per month.. with additional minimums to buy more at $1.00 per investment choice... seems pretty similar

There's a big difference between $100/month and $5/per pay period.

Daniel

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #13 on: January 30, 2014, 12:03:24 PM »
Also, it will be invested in something like inflation adjusted treasury securities (like iBonds or TIPS), similar to the TSP for gov't employees, and while I suspect you could put those in a Roth IRA, most people probably don't. All of this to say, they can market it as guaranteed to gain value (unlike the stock market). Also they can be a max of 15k, at which point they have to be rolled into...(drumroll)...a Roth IRA.

Source: http://blogs.wsj.com/washwire/2014/01/29/nine-things-to-know-about-obamas-myra-accounts/

I think it's a great idea to help people start saving, I mean something like half of US adults have no savings for retirement.

mpbaker22

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #14 on: January 30, 2014, 12:08:18 PM »
My intention wasn't to be a "jerk" in any way... I think I fall into that low income threshold actually... (4 people living off of a $45,000/yr income... ugh...) but I still know that I'm supposed to save money...  It is a little offensive to me that they need to repackage it and sell a Roth to me in a shiny new box.. That's all.  I understand that the minimums are lower, but I started a Roth at Schwab with $100 and a direct deposit of $100 per month.. with additional minimums to buy more at $1.00 per investment choice... seems pretty similar

There's a big difference between $100/month and $5/per pay period.

but $5/pay period is the minimum.  $100 probably isn't a minimum at Schwab?

huadpe

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #15 on: January 30, 2014, 12:18:03 PM »
A couple points of clarification -

1.) This is a Roth IRA.  Contributions to it count against your Roth contribution limit.  However, the salary cap is set to the married filing jointly cap, so if you're single, you could sneak in contributions to a Roth if your income was in that gap.

2.) The bonds in it are the special G-fund bonds from the Thrift Savings Plan, which give bondholders a synthesized rate based on the currently marketed long-term securities of the Treasury.  This is normally 1-2% above the short term T-bill rate.

rocksinmyhead

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #16 on: January 30, 2014, 12:46:42 PM »
Cue the ridiculously well-adjusted-looking stock photo people making short, self-centered sentence fragments.

"Retirement savings for my budget.  My way."

"It's what my family needs for today.  And tomorrow."

ROFL

also, I agree with those who say while it sounds kinda silly to us, I think it's great if it will start more people saving even the tiniest bit for retirement. like influenzaremix said, tons of people have saved NOTHING AT ALL.

the analogy that comes to mind for me is that although I think "fun runs" like the Color Run are pretty absurd and I would rather run an actual timed race that is much less crowded where I don't get dyed cornstarch thrown in my eyes, if it gets more people running who would otherwise be completely sedentary, then that's awesome!

nyxst

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #17 on: January 30, 2014, 04:11:14 PM »


My intention wasn't to be a "jerk" in any way... I think I fall into that low income threshold actually... (4 people living off of a $45,000/yr income... ugh...) but I still know that I'm supposed to save money...  It is a little offensive to me that they need to repackage it and sell a Roth to me in a shiny new box.. That's all.  I understand that the minimums are lower, but I started a Roth at Schwab with $100 and a direct deposit of $100 per month.. with additional minimums to buy more at $1.00 per investment choice... seems pretty similar

There's a big difference between $100/month and $5/per pay period.

but $5/pay period is the minimum.  $100 probably isn't a minimum at Schwab?

Correct. For my schwab account, I can put in one dollar a month if I was so inclined... Or no dollars per month... But I have an automatic withdraw set up, so it is mindless except I choose where to invest it....

Elyse

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #18 on: January 31, 2014, 11:05:12 AM »


My intention wasn't to be a "jerk" in any way... I think I fall into that low income threshold actually... (4 people living off of a $45,000/yr income... ugh...) but I still know that I'm supposed to save money...  It is a little offensive to me that they need to repackage it and sell a Roth to me in a shiny new box.. That's all.  I understand that the minimums are lower, but I started a Roth at Schwab with $100 and a direct deposit of $100 per month.. with additional minimums to buy more at $1.00 per investment choice... seems pretty similar

There's a big difference between $100/month and $5/per pay period.

but $5/pay period is the minimum.  $100 probably isn't a minimum at Schwab?

Correct. For my schwab account, I can put in one dollar a month if I was so inclined... Or no dollars per month... But I have an automatic withdraw set up, so it is mindless except I choose where to invest it....

How much did you need to open it?

tracipam

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #19 on: February 01, 2014, 05:56:06 PM »

How much did you need to open it?

$1000.  My Roth IRA is still with Schwab because back when I was a poor student that was the best option I could find that would get me started.  Their index funds and ETFs are pretty good, fee-wise. 

kyleaaa

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #20 on: February 01, 2014, 09:42:34 PM »
From reports I've seen, these accounts basically give the public access to the TSP's G fund. The G fund offers perhaps the only thing approaching a "free lunch" in finance. I just wish I could invest in it sufficiently to make a dent in my portfolio.

Elyse

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #21 on: February 03, 2014, 06:29:05 AM »

How much did you need to open it?

$1000.  My Roth IRA is still with Schwab because back when I was a poor student that was the best option I could find that would get me started.  Their index funds and ETFs are pretty good, fee-wise.

So the MyRA is still useful to families that have trouble coming up with $1k. 
I'm not saying this is a groundbreaking new product, just that it does have its uses for people that aren't great savers.

It could be their gateway drug to saving.

nyxst

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #22 on: February 05, 2014, 06:48:50 PM »
Right. They waive the $1000 minimum to get you started as long as you set up a minimum auto deposit of $100 per month. I guess that is still a big barrier. After the $1000 is in there, them there is no minimum deposit required.  I don't make a lot of income right now, but this didn't seem like a barrier to me. I was really surprised how lenient the terms were. The other accounts I looked at first had much higher starting minimums. Hopefully you guys are right and the low $25 deposit is low enough to get people started.

T-Rex

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #23 on: February 07, 2014, 09:44:05 AM »
I think anything that encourages people to save without ripping them off is positive. I really could have used MyRA when I was young and working at crappy jobs.

Trying225

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #24 on: February 09, 2014, 01:27:01 PM »
I actually have been helping someone get on Obamacare. When I looked at his financial information, I realized he didn't have savings for retirement. He works for himself and he's 60. I've been trying to find out if he could enroll in a MyRA even though he's 60. Even if he put in 10$ a month, it'd be better than nothing at this point. :-/

sherr

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Re: MyRA... hmmmmm...This sounds familiar.......
« Reply #25 on: February 10, 2014, 11:00:50 AM »
I actually have been helping someone get on Obamacare. When I looked at his financial information, I realized he didn't have savings for retirement. He works for himself and he's 60. I've been trying to find out if he could enroll in a MyRA even though he's 60. Even if he put in 10$ a month, it'd be better than nothing at this point. :-/

Not really. $10 a month for 10 years is a whopping $1,200 before interest. The difference between $1,200 and $0 is not going to do anyone any good when they're 70. He needs to make radical life changes, refraining from drinking one or two lattes a month is not going to do anything.