Myra Roth Wants Your Money
Promises Tax Benefits and Safety
Myra Roth, the government’s new retirement account, launched nationwide this past Wednesday. myRA is her given name and she wants you to invest your hard earned money with her. She is of no kin to Ira or Betsy, and I do have my suspicions about her.
Disclaimer: This blog was written with satire and is not intended as investment or tax advice.
As I write this blog, our country is celebrating Veteran’s Day, and we are broke. A great number of the population are retired and/or unemployed. So, I find it ironic that our government suddenly finds itself in a position to ask you to invest your hard earned money with them, so you can receive benefits.
On Veteran’s Day, typically government offices like the Post Offices and Social Security Offices will be closed. Big Banks under the Federal Reserve System will also be closed. But, don’t worry, your hard earned money will still be at work.
A little background:
In 1813 we got Uncle Sam
In 1913 we got a creature from Jekyll Island called the Fed and also the IRS
In 1935 we got Social Security
In 1965 we got Medicare
In 2010 we got the unaffordable health care act, ACA
In 2015 we get Myra, a Roth’s child
The Roth IRA was first established by the Taxpayer Relief Act of 1997 and named after its sponsor, Senator William Roth of Delaware. The primary difference between the ROTH IRA and other qualified plans (401k, IRA, etc) is that your money goes in after tax and comes out tax-free, versus going in pre-tax or with a deduction and paying taxes at distribution.
Although Myra Roth is of no relation to William Roth, at least in blood origin, she does carry some of the same genes. The myRA touts tax benefits and according to the myra.gov website, myRA is “a Roth IRA retirement savings account with no start-up cost and no fees.”
Why I’m suspicious:
Our country’s largest expenditures are Social Security and Medicare. The U.S. Treasury administers these programs. According to usdebtclock.org those two expenditures amount to over $1.8 TRILLION annually. And, our unfunded liabilities are nearly $100 TRILLION!!! The U.S. Treasury and the IRS will also manage Myra.
A recent article on CNSNews.com reported that the Social Security Administration spending hit a record high of $944,143,000,000 for the fiscal year of 2015, that’s about $6,345 for every American with a job. This nuber was up $33,748,280,000 from the fiscal year 2014. At the same time, there were only 121,839,000 people with full-time jobs in the United States in September, according to the Bureau of Labor Statistics.
Today, roughly 60 million people, including children, get Social Security benefits monthly. The average check is $1,224, so some simple math gives you the amount of $73,440,000,000 monthly.
You’re probably aware that the baby boomer generation, our country’s largest demographic, are retiring. There are approximately 75 million baby boomers that will soon be collecting Social Security checks. Do the math… That’s an additional $75 Billion a month!
U.S. taxpayers are more on guard than ever about how the federal government spends taxpayer money, though few truly understand the ramifications that this massive government debt brings. Most people just want to retire in peace with a company pension aided by Social Security. Unfortunately, those days are over. Pension plans are broke and very few employers even offer them anymore. Unless that is, you work for the government.
According the the government website:
myRA is a Roth IRA that invests in a new U.S. Treasury retirement savings bond, which will not lose money. myRA accounts cost nothing to open, have no fees, and don’t require a minimum amount of savings.
The government-backed plan maintained by the U.S. Department of the Treasury is an option for U.S. workers whose employers don’t offer a retirement savings plan. myRA is not intended to replace existing retirement savings options, including employer-sponsored retirement plans.
Accounts can be opened with any amount you choose from $2up to $5,500 per year for most contributors (or $6,500 per year if you will be 50 years of age or older at the end of the year) but not more than your earned income. Money in your myRA continues to earn interest until your account reaches $15,000, or 30 years from the day you first funded the account (whichever comes first). Then the balance will be transferred to a private-sector Roth IRA, where you can continue to invest your savings and make additional contributions.
Accounts are available to anyone earning an annual salary of less than $131,000, or $193,000 if married and filing jointly. Payments can go into the plan automatically, directly from a checking or savings account, or from an employer’s payroll system, via direct deposit. Any or all of a federal tax refund can be directed into a myRA account, which is portable from employer to employer.
All of this sounds great, but you know what they say, “If it sounds too good to be true, it probably is.” Now, I don’t want to sound negative and I do want to give them the benefit of the doubt, but my experience warns me to be guarded of government programs.
Government buzzwords promoting myRA are, Simple, Safe and Affordable. Does that sound familiar?
In the words of Ronald Reagan, “The most terrifying words in the English language are: I’m from the government and I’m here to help.”
Another concern is that these plans are being advertised with taxpayer money, similar to Wic and ACA. As a matter of fact, just by reading this blog you will likely be “retargeted” as a person of interest and start noticing these ads appearing in your browser.
Questions to ask:
1. Should we trust the government to manage our money?
2. What will happen to traditional money managers?
In closing, the myRA plan sounds good. It’s aimed at self-employed and working American’s who don’t have the opportunity to save in traditional retirement plans. But, as with most government plans there’s always more to be determined.