06 Apr Should I invest in a myRA?

Q. What’s the myRA and where can I get one? Can you have both a MyRA and a Roth IRA?
— Thinking about it

A. The myRA stands for “my retirement account.”

It was developed by the U.S. Treasury Department to encourage Americans to save for retirement.

A myRA might be a good option for you if you don’t have access to a retirement savings plan at work or if you have no other options to start saving for retirement, said Cynthia Aiken, a certified financial planner with RegentAtlantic in Morristown. If the cost of opening and maintaining a retirement savings account is too high for you or you are concerned about complicated investment options and losing money, a myRA is worth considering.

You can fund your account from your paycheck through direct deposit with your employer, fund the account from your checking or savings account or from your federal tax refund, Aiken said.

“There are no costs to open the account, no fees and no minimum amount of savings,” she said. “There is only one investment option with the myRA – a United States Treasury retirement savings bond.”

She said the bond is guaranteed by the U.S. government and will not lose value.

myRA accounts earn interest at the same rate as investments in the Government Securities Fund, which earned 1.82 percent in 2016 and averaged 2.63 percent annually over the 10 years ending Dec. 31, 2016, Aiken said.

The same income and annual contribution limits apply to myRA as those of a traditional or Roth IRA, she said.

“Your deposits into your myRA will earn interest until your account balance reaches $15,000 or 30 years from the first day you funded the account, whichever comes first,” she said. “At that point, the account balance will be transferred to a private-sector Roth IRA into which you can continue to make additional contributions.”

Aiken said generally, the myRA may not be the best option for everyone.

She said Vanguard, Fidelity, E*Trade and other discount brokers offer Roth IRAs at no cost to open, funds with low investment minimums and low fees, and they provide a large menu of mutual fund choices rather than the one investment option in the myRA.

“The process of opening an account is quick and easy and in most cases the brokers provide guidance on investment selection if you want help,” she said. “The only obvious advantage of the myRA is the direct deposit from your paycheck — probably not a good enough reason to limit yourself to the rate of return on the Government Securities Fund.”

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This post was first published on April 6, 2017.