President Obama launched a new retirement savings plan aimed for lower income Americans as well as millennials to take advantage of in orer to prepare for their retirement. myRA is similar to a Roth IRA (individual retirement account) in regards to it having the same tax treatment, annual income and contribution limitations.
Learn more about the benefits to an myRA below:
* “Low start-up cost. An initial investment can be as little as $25, with ongoing contributions as little as $5. By contrast, many IRAs require an initial deposit of at least $1,000.
* No fees, no market risk. The money essentially will be invested in government bonds paying the same variable rate as the retirement account for federal employees. As of April 2014, the rate for the federal government’s Thrift Savings Plan G Fund was 2.36%.
* Tax-free earnings. As with a Roth IRA, all contributions are nondeductible, but qualified withdrawals are tax—and penalty—free.
* Penalty-free withdrawals. You can take out money you’ve put into the account at any time, but any earnings you take out before age 59 ½ will be subject to taxes and a 10% penalty.”
But before you begin, please be cautious of the drawbacks:
“Once the balance in a myRA reaches $15,000, or you have had the account for 30 years, you must transfer the myRA to a private sector Roth IRA. And, you are limited to a single investment.”
Visit your nearest credit union for more help and guidance on setting up your ‘myRA’ or learn more in the full issue here.
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