Workers have one fewer option to save for retirement in the wake of the shutdown by the Department of the Treasury of the myRA program, intended for workers who had no access to a retirement plan at works so that they could save for retirement.
The New York Times reports that the program, put in place under former President Barack Obama, was called "too expensive" by Treasury, which is notifying the 30,000 participants in the program of its end by e-mail today. They will be told that they can roll the money over into a Roth IRA.
President Obama ordered the creation of the MyRA program three years ago as a means of improving retirement preparedness for people who did not have access to a plan through employment.
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MyRA accounts became available at the end of 2015; since then, about 20,000 accounts were opened to which account owners contributed a total of $34 million, according to Treasury. The median balance of those accounts is around $500. Another 10,000 accounts have been opened, although their owners have not contributed to them.
While it's not as if the myRA program could ever be the ultimate solution to the retirement crisis, since it was devised as more of a "starter" program—account owners could only contribute up to $15,000 before the funds would be rolled over into a private-sector plan—it was regarded as a strong, risk-free beginning for people, particularly low-income workers, who otherwise might have no opportunity to save to begin to put aside funds for their futures.
The funds were invested in U.S. Treasury savings bonds, and there was no minimum deposit required, as well as no fees charged. Workers could contribute up to $5,500 annually–$6,500 annually for those 50 and older—and the money would be automatically deducted from their paychecks. Alternatively, they could contribute by direct transfers of funds from a checking or savings account.
According to Jovita Carranza, the U.S. Treasurer, the cost of the program was too high compared to demand for myRA accounts. Treasury says that the program has cost $70 million since 2014, and would cost $10 million annually going forward. The cuts in the budget proposed by the Trump administration have affected numerous programs; myRA has also fallen under the ax.
Earlier in the month, a group of Democratic senators wrote to Steve Mnuchin, Treasury secretary, asking for the department to demonstrate its support for the myRA program in the wake of the Trump administration's reversal of two rules making it easier for states to create retirement programs for workers who lacked a retirement plan at work.
The response on that support, it would seem, has come today.
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