The Treasury Department has announced that it will be phasing out the myRA program due to cost overruns and lack of use by Americans.
The program was established during the Obama administration and promised to be a way to help millions of Americans save for retirement by giving them access to an investment similar to that of the TSP’s G Fund, something that had previously only been available to federal employees. Two Congressmen liked the program so much, they wanted to make it permanent.
Despite all of that fanfare, the myRA program never went anywhere. After seeing only 20,000 enrollees after two years and costing the government $70 million dollars since it was established, twice as much as what participants had contributed to their accounts, the government is scrapping the failed program.
U.S. Treasurer Jovita Carranza said in a statement:
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.
Today, there are 30,000 myRA accounts, 20,000 of which have a median balance of $500, and an additional 10,000 accounts have a zero balance because their owners never made contributions. Deposit totals of all accounts come in at just $34 million. The Treasury Department estimates that costs to run the program would have been an additional $10 million per year going forward on top of the $70 million already spent.
The myRA website notes that new enrollees are no longer being accepted but that existing accounts remain open for now and funds are still accessible.
A statement on the website reads:
We will be reaching out to all of our account holders with more information regarding the transfer or closure of your account. We will provide account holders with additional information in the coming weeks that outlines when we’ll stop accepting and processing deposits.
We recommend you log in to your account to make sure your contact information is complete and up to date. You can also update your information by contacting customer service.
Participants can transfer funds to a Roth IRA at any time and accounts with a $0 balance will be subject to automatic closure beginning on September 18, 2017.