WASHINGTON–A program created by the Obama Administration to help create retirement savings accounts is being shuttered by the Treasury Department, which said the program is too expensive.
The “myRA’ program, which is intended for people who do not have workplace savings plans available to them, currently has 30,000 participants. Treasury has sent an email to account holders telling them the program is being shut down and they can roll the money into Roth IRAs.
Approximately $34 million has been deposited in the accounts, according to the Treasury, with a median account balance of $500. An additional 10,000 accounts have been opened but their owners have not made contributions, Treasury said.
In a statement, U.S. Treasurer Jovita Carranza said demand for the accounts was not high enough to justify the cost, which he said has amounted to $70 million since 2014 and would cost $10 million annually going forward.
Under the myRA program, workers could contribute up to $5,500 a year, or $6,500 if they were 50 or older. The money could be deducted automatically from their paychecks, or they could contribute to the accounts by directly transferring funds from a checking or savings account. Funds were invested in United States Treasury savings bonds. There was no minimum deposit and no fees. But the maximum workers could save was only $15,000, at which point the balance would be rolled over to a retirement account in the private sector.
Since the announcement, several states have said they will look to offer alternatives.