WASHINGTON (Reuters) — The Obama administration is scheduled on Wednesday to launch a retirement savings vehicle called "myRA," aimed at enrolling more Americans in a government-backed investment option.
In details provided by the White House on Wednesday, the retirement savings proposal would be similar to a Roth Individual Retirement Account, but with holdings backed by the U.S. government like savings bonds.
"MyRA guarantees a decent return with no risk of losing what you put in," President Barack Obama said in introducing the program on Tuesday night in his State of the Union Speech.
Those accounts would be available to households earning no more than US$191,000 a year. Businesses will need to register in the pilot program by the end of the year for their employees to participate voluntarily.
Investors would earn a variable interest rate equal to the Thrift Savings Plan, or TSP, which is available to federal employees. Contributions could be withdrawn tax-free at any time.
Initial investments could be as low as $25, and contributions as small as $5 could be made through payroll deductions.
Participants could save up to $15,000, for a maximum of 30 years, in their accounts before transferring their balances to a private-sector Roth IRA.
About half of all workers and 75 per cent of part-time workers lack access to employer-sponsored retirement plans, the White House said.
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