Treasury ends myRA program

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weltschmerz
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Treasury ends myRA program

Post by weltschmerz » Fri Jul 28, 2017 12:38 pm

Today, the US treasury department ended the myRA program. Apparently, the program cost $70 million to set up and would have cost $10 million per year going forward. It had only attracted $34 million in deposits so far, so they axed it. It was a strange program, only allowed a balance of $15k before you had to roll it over to a brokerage. Did any Bogleheads even bother with these myRA accounts?

I wonder, what other programs are on the chopping block? TreasuryDirect, perhaps? Many brokerages offer free trades on treasury bills/notes/bonds, so I could see that portion being scrapped, leaving only the Savings Bond portion. Considering how low the contribution limit is ($10k per savings bond, per person, per year), I would not be surprised to see them scrap the whole darn thing in the name of cost savings.
Last edited by weltschmerz on Fri Jul 28, 2017 12:49 pm, edited 1 time in total.

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Re: Treasury ends myRA program

Post by whodidntante » Fri Jul 28, 2017 12:43 pm

I looked at it for my fixed income because it essentially acted like the G fund. But I was not eligible to contribute to a myra account.

Treasury direct allows purchases of 10k for i bonds and purchase of 10k for EE bonds per capita per year.
Last edited by whodidntante on Fri Jul 28, 2017 12:45 pm, edited 1 time in total.

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Re: Treasury ends myRA program

Post by Thesaints » Fri Jul 28, 2017 12:44 pm

The Dan wrote:Today, the US treasury department ended the myRA program. Apparently, the program cost $70 million to set up and would have cost $10 million per year going forward. It had only attracted $34 million in deposits so far, so they axed it. It was a strange program, only allowed a balance of $15k before you had to roll it over to a brokerage. Did any Bogleheads even bother with these myRA accounts?

I wonder, what other programs are on the chopping block? TreasuryDirect, perhaps? Many brokerages offer free trades on treasury bills/notes/bonds, so I could see that portion being scrapped, leaving only the Savings Bond portion. Considering how low the contribution limit is ($5000 per savings bond, per person, per year), I would not be surprised to see them scrap the whole darn thing in the name of cost savings.
The limit is actually 10k/yr. 20k if you include both Series. 25k if you include tax refunds.
IRA's limit is only 5.5/6.5k and I don't see that risking to be scrapped.

chevca
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Re: Treasury ends myRA program

Post by chevca » Fri Jul 28, 2017 12:47 pm

I didn't see that one lasting long. It seemed like it was more of a feel good/sounds good thing. But, those eligible for it likely aren't saving or investing much anyway.... and those that are saving and investing likely looked at it with it's limits and went, pfft.

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Re: Treasury ends myRA program

Post by weltschmerz » Fri Jul 28, 2017 12:48 pm

whodidntante wrote: Treasury direct allows purchases of 10k for i bonds and purchase of 10k for EE bonds per capita per year.
You are right. I will amend the original post.

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Re: Treasury ends myRA program

Post by triceratop » Fri Jul 28, 2017 12:52 pm

The Dan wrote:Today, the US treasury department ended the myRA program. Apparently, the program cost $70 million to set up and would have cost $10 million per year going forward. It had only attracted $34 million in deposits so far, so they axed it. It was a strange program, only allowed a balance of $15k before you had to roll it over to a brokerage. Did any Bogleheads even bother with these myRA accounts?

I wonder, what other programs are on the chopping block? TreasuryDirect, perhaps? Many brokerages offer free trades on treasury bills/notes/bonds, so I could see that portion being scrapped, leaving only the Savings Bond portion. Considering how low the contribution limit is ($10k per savings bond, per person, per year), I would not be surprised to see them scrap the whole darn thing in the name of cost savings.
I looked at it, and some Bogleheads have discussed it in the past. Given that one must convert to a regular Roth account when one hit the balance cap of $15,000 it really limited the usefulness from the perspective of access to the G fund. I never used it.
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Re: Treasury ends myRA program

Post by weltschmerz » Fri Jul 28, 2017 12:53 pm

chevca wrote:I didn't see that one lasting long. It seemed like it was more of a feel good/sounds good thing. But, those eligible for it likely aren't saving or investing much anyway.... and those that are saving and investing likely looked at it with it's limits and went, pfft.
Yeah, apparently the 20,000 people who signed up and put money into it only had a median account balance of $500. Then there was another 10,000 people who signed up but had a $0 balance. Not a lot of participation there.

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Re: Treasury ends myRA program

Post by flamesabers » Fri Jul 28, 2017 1:25 pm

chevca wrote:It seemed like it was more of a feel good/sounds good thing. But, those eligible for it likely aren't saving or investing much anyway.... and those that are saving and investing likely looked at it with it's limits and went, pfft.
I agree. I never understood why it was marketed as a substitute for a 401k when myRA contributions counted against one's IRA contributions limits. :confused

I do wonder if myRA would've had more success if it had 401k contribution limits and did away with the $15k lifetime cap. If this was the case, myRA might have been a good alternative for folks who don't have access to a 401k or only have access to a very bad 401k. In the very least, employees would no longer have to invest in their employer's 401k plan to make use of the tax benefits.

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Re: Treasury ends myRA program

Post by Thesaints » Fri Jul 28, 2017 1:45 pm

myRA was intended as a vehicle for those at the extreme (low) end of the spectrum as investable funds are concerned.
Not surprisingly participation was extremely low.
A(nother) bad solution to a(nother) real problem ( 8-) )

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MyRA bites the dust

Post by Alan S. » Fri Jul 28, 2017 3:12 pm

Program cost taxpayers $2 for every dollar saved.

People have plenty of savings options, they simply would rather spend. Yet another plan was not needed, but perhaps some self discipline could be generated in some way.

http://money.cnn.com/2017/07/28/retirem ... index.html

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Re: MyRA bites the dust

Post by LadyGeek » Fri Jul 28, 2017 3:18 pm

Thanks, here's the official site page: myRA: Program Update

The press release: Treasury Announces Steps to Wind Down myRA Program

As a reminder, political comments are off-topic.
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Re: MyRA bites the dust

Post by barnaclebob » Fri Jul 28, 2017 3:31 pm

Alan S. wrote:People have plenty of savings options, they simply would rather spend.
Also a large portion of the country isn't paid enough to live at a reasonable comfort level and save for retirement. And any of us lucky enough to be able to save money have better options like a normal Roth.

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Re: MyRA bites the dust

Post by Rupert » Fri Jul 28, 2017 3:44 pm

It was an oddly-designed program, but I think it was an attempt to reach out to potential savers who don't trust banks. You'd be surprised how many people there are out there like that. They pay all their bills with cash or money orders. When they get older, they withdraw their social security funds in cash as soon as they're deposited.

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Re: Treasury ends myRA program

Post by LadyGeek » Fri Jul 28, 2017 3:49 pm

^^^ I merged Alan S.' thread into here, which is in the Investing - Theory, News & General forum. I'd say this is big news.
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Re: MyRA bites the dust

Post by flamesabers » Fri Jul 28, 2017 4:45 pm

Alan S. wrote:Program cost taxpayers $2 for every dollar saved.

People have plenty of savings options, they simply would rather spend. Yet another plan was not needed, but perhaps some self discipline could be generated in some way.

http://money.cnn.com/2017/07/28/retirem ... index.html
I suspect the program could've been revenue neutral (or even generate a surplus) if it wasn't so restrictive. Instead of marketing the plan for just the low-moderate income demographics, I think the higher-income demographics should have been included as well. Yes, people with higher incomes and/or sizable portfolios probably don't need extra help with saving for retirement. However, myRA did offer access to the G Fund, which I think would be an attractive feature for investors of all sizes. Instead of having a median balance of $500, the median balance could've been much higher when you have people who already max out their IRAs and 401k accounts every year, investing in myRA.

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MyIRA accounts to close down soon

Post by JosephG » Fri Jul 28, 2017 7:07 pm

MyIRA accounts being forced to close soon: Darn, I used this as a TSP-G/Stable Value fund allocation. I'm wondering what people without access to stable value or TSP-G use as a similar type allocation- there's nothing quite like these two. I might have to use high-yield CDS or Total Bond Market

Treasury Announces Steps to Wind Down myRA Program

7/28/2017 ​
Washington, D.C. – The U.S. Department of the Treasury today announced that it will begin to wind down the myRA program after a thorough review by Treasury that found it not to be cost effective. This review was undertaken as part of the Administration’s effort to assess existing programs and promote a more effective government.

Demand for and investment in the myRA program has been extremely low. American taxpayers have paid nearly $70 million to manage the program since 2014.

“The myRA program was created to help low to middle income earners start saving for retirement. Unfortunately, there has been very little demand for the program, and the cost to taxpayers cannot be justified by the assets in the program. Fortunately, ample private sector solutions exist, which resulted in less appeal for myRA. We will be phasing out the myRA program over the coming months. We will be communicating frequently with participants to help facilitate a smooth transition to other investment opportunities,” said Jovita Carranza, U.S. Treasurer.

Retirement savers have options in the private sector that offer no account maintenance fees, no minimum balance, and safe investment opportunities.

Participants in the myRA program are being notified of the upcoming changes, including information on moving their myRA savings to another Roth IRA. Participants are encouraged to visit http://www.myRA.gov for additional information or to call myRA customer support with any questions.

“We are committed to promoting retirement savings, and, as Treasurer, I plan to devote a substantial amount of my time to ensuring more Americans have the tools and knowhow to save for retirement,” said Carranza.

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Re: Treasury ends myRA program

Post by LadyGeek » Fri Jul 28, 2017 7:13 pm

JosephG, Welcome! I merged your post into here, which is in the Investing - Theory, News & General forum (news).

Do you need assistance with your portfolio? I see you've already asked a few questions. But to give appropriate advice, we really need to see your entire portfolio together in one spot.

Start a thread in the Investing - Help with Personal Investments forum and post your portfolio info using the Asking Portfolio Questions format. It will make you think about the "big picture" and give us the information we need to point you in the right direction.

If you have any questions, ask them in that thread.
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Re: MyRA bites the dust

Post by chinto » Fri Jul 28, 2017 10:37 pm

barnaclebob wrote: And any of us lucky enough to be able to save money have better options like a normal Roth.
It isn't luck, thank you, it is planning, preparation, and perseverance.

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Re: MyRA bites the dust

Post by kjvmartin » Fri Jul 28, 2017 11:28 pm

chinto wrote:
barnaclebob wrote: And any of us lucky enough to be able to save money have better options like a normal Roth.
It isn't luck, thank you, it is planning, preparation, and perseverance.
I'm sure glad I planned to be born in the USA. I'm sure Warren Buffet's kids are all glad they planned to have him as their father.

Hard work, planning, preparation, and perseverance are all wonderful, but there's a lot more to success & life to that. Just because someone works hard does not mean they will be able to afford a Roth contribution.

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Why demolish Myra?

Post by VennData » Sat Jul 29, 2017 1:40 am

[Thread merged into here, see below. --admin LadyGeek]

Here's a great idea for a way for the most vulnerable savers to start out and they're getting rid of it? Why?

https://www.nytimes.com/2017/07/28/busi ... obama.html

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Re: Why demolish Myra?

Post by JoMoney » Sat Jul 29, 2017 1:57 am

VennData wrote:Here's a great idea for a way for the most vulnerable savers to start out and they're getting rid of it? Why?

https://www.nytimes.com/2017/07/28/busi ... obama.html
According to the article,
Jovita Carranza, the United States treasurer, said in a statement that demand for the accounts was not high enough to justify the expense. The program has cost $70 million since 2014, according to the Treasury, and would cost $10 million a year in the future.
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Re: Why demolish Myra?

Post by FiveK » Sat Jul 29, 2017 1:58 am


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Re: Why demolish Myra?

Post by theplayer11 » Sat Jul 29, 2017 6:56 am

useless program

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Re: Why demolish Myra?

Post by aristotelian » Sat Jul 29, 2017 7:51 am

People didn't use it, unfortunately. Most people in that position do not want to save. People that do save want to invest rather than own savings bonds, as they should.

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Re: Treasury ends myRA program

Post by LadyGeek » Sat Jul 29, 2017 12:05 pm

I merged VennData's thread into here.
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Re: Treasury ends myRA program

Post by finite_difference » Sat Jul 29, 2017 1:14 pm

Why not just let anyone buy the G fund in their IRA? And let IRA brokers charge some nominal overhead fee. Seems a lot less kludgey than a whole separate program.
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Re: Treasury ends myRA program

Post by PhysicsTeacher » Sat Jul 29, 2017 1:59 pm

My brother opened a myRA at my suggestion and funded it with $5.5k. It fit his needs well because it was offered an acceptable interest rate while guaranteeing his principal wouldn't decline and he would have liquidity if a major emergency arose. He is currently unemplyed so, while he has no imminent need for access to this money, it isn't an optimal time to roll into a target date or life strategy fund. Thoughts on what he should do? Are any online banks offering semi-decent rates on short term cds or savings accounts for Roths? What are the viable alternatives for small savers who benefited from MyRA?
Last edited by PhysicsTeacher on Sat Jul 29, 2017 2:04 pm, edited 1 time in total.

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Re: Treasury ends myRA program

Post by LadyGeek » Sat Jul 29, 2017 2:01 pm

finite_difference wrote:Why not just let anyone buy the G fund in their IRA? And let IRA brokers charge some nominal overhead fee. Seems a lot less kludgey than a whole separate program.
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Re: Why demolish Myra?

Post by triceratop » Sat Jul 29, 2017 2:02 pm

aristotelian wrote:People didn't use it, unfortunately. Most people in that position do not want to save. People that do save want to invest rather than own savings bonds, as they should.
In what position? Perhaps people looked at the program and contributed instead to their personal Roth IRA. That's what I did, and I make substantially less than the median American income.
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Re: Treasury ends myRA program

Post by saltycaper » Sat Jul 29, 2017 2:18 pm

Too bad the program was killed before it was given a chance to succeed in encouraging people to invest. It seems many comments are looking at the program from their own perspective, one where they thoroughly understand the investment accounts available to them, have extensive knowledge about investing, are generally comfortable with it, and have the means to invest substantial sums. These accounts were not geared toward such people.
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Re: Why demolish Myra?

Post by aristotelian » Sat Jul 29, 2017 4:30 pm

triceratop wrote:
aristotelian wrote:People didn't use it, unfortunately. Most people in that position do not want to save. People that do save want to invest rather than own savings bonds, as they should.
In what position? Perhaps people looked at the program and contributed instead to their personal Roth IRA. That's what I did, and I make substantially less than the median American income.
Exactly. It was supposedly designed for low income people who can't take risk with their savings, but even low income people have better options than US savings bonds.

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Re: Treasury ends myRA program

Post by workerbeeengineer » Fri Aug 11, 2017 9:43 pm

Will attempt to stay away from forbidden areas here...

I read a commentary on the end of the MyRA program today on the CNBC website. Author from a non-profit pretty much showing her political views. Objectively however, it appears there is an aggregate balance in the program of $35M and there are currently approximately 30000 accounts. I work that out to be a little less than $1200 per account versus the upper limit of $15k before an account holder needs to transition to a traditional retirement account.

First question: what is the average age of the average account holder? A $1200 balance in the retirement account of a 19 year old is a great thing...50+ years of compounding ahead for him or her. Not so good however for someone 55 or older.

Second question: what has been the rate of change of the average account balance as a function of time? In other words, extrapolating the current account value growth history, how many years until the average account hits the $15k threshold?

I'm afraid this all supports what is hopefully viewed as a non-political conclusion that there is a train wreck ahead (or even right now) regarding the retirement prospects of many people.

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Re: Treasury ends myRA program

Post by understandingJH » Fri Aug 25, 2017 12:14 pm

Well, this is just great. Now I need to deal with the hassle of transferring an IRA account. I parked $5500 here and expected it to grow for 30 years or to $15,000 which ever happened first as part of my bond allocation as I don't have access to the G fund in any other way. Why offer something for 30 years and then take it away? The current administration should have left this be as originally purposed and promised.

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