The US Treasury has announced that it is winding down the “myRA” program started by former President Barack Obama’s administration in 2015 as a retirement savings option for low-income Americans, and that participants will be allowed to roll their money into private Roth IRAs, the New York Times reports:
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. … The closing of myRA is the latest step taken by the Trump administration to reverse Obama-era savings initiatives and investor protections.
The myRA program was launched by the Obama administration in 2015 to encourage US citizens to save more for retirement. Marketed as a “starter” retirement account for low-income individuals without employer-sponsored retirement plans, myRAs invested in the government securities investment fund and promised no risk of losing money. However, critics of the myRA questioned whether it was really all that useful as a retirement savings vehicle, noting that the fund’s low level of risk meant it also offered very low returns.
According to the Times, although 30,000 Americans opened myRAs, only 20,000 ever contributed to them, with a median account balance of $500 and total contributions amounting to $34 million. Mark Iwry, the chief architect of the program, told the Times the decision to close the program, which took six years to design, after less than two years was shortsighted and “reflect[ed] a fundamental misunderstanding of its purposes and potential as a long-term investment in working families’ economic security and financial independence.”