Vice President Joe Biden and House Speaker John Boehner of Ohio listen as President Barack Obama gives his State of the Union address on Capitol Hill in Washington. In the address, Obama unveiled a new program called “myRA,” for “my IRA.” (AP Photo/Charles Dharapak, File)
NEW YORK (AP) — A savings program put into place under President Barack Obama and designed to get more people to put away money for retirement is being killed by the Treasury Department, which said it is too costly to maintain.
The program, called myRA, was launched about two years ago for those who don’t have access to a 401(k) or another retirement plan from their employer. The myRA accounts had no fees or minimum deposit, and were meant to appeal to low-income workers.
“Unfortunately, there has been very little demand for the program,” said U.S. Treasurer Jovita Carranza, in a release Friday. “The cost to taxpayers cannot be justified by the assets in the program.”
The Treasury Department said myRA savers had put away about $34 million since late 2015, and that the program cost taxpayers nearly $70 million. It would have cost $10 million a year to continue the program, the Treasury said. About 30,000 accounts were opened, and 10,000 have no money in them. The average account holder has about $1,500 in their account, the Treasury said.
Participants received emails Friday requesting a stop on automatic deposits made to any myRA account. The Treasury advised those with an account to transfer money to another retirement account, known as a Roth IRA, at a bank or brokerage firm. The accounts also can be cashed out, but those that do may have to pay tax penalties.
The Treasury said it doesn’t have a deadline yet for when the accounts need to be closed. Accounts with a zero balance will be closed starting in September.
