Treasury launches new retirement savings program

Treasury launches new retirement savings program
© Lauren Schneiderman

The Obama administration on Wednesday launched a retirement savings program aimed at those who lack access to employer-based plans.

Treasury Secretary Jack LewJacob (Jack) Joseph LewLobbying World Russian sanctions will boomerang Obama talks up Warren behind closed doors to wealthy donors MORE kicked off the myRA savings program offering a plan without fees, or minimum balance or contribution requirements, in an effort to spur more people to gradually begin the process of putting money away for their post-work years. 

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Lew said that the program "is designed to remove common barriers to saving, and give people an easy way to get started." 

"When people start saving there is a good chance they will continue," Lew told reporters on a call. 

Participants can set up direct deposit contributions through an employer, they can fund the plan through recurring or one-time contributions from a checking or savings account and they can direct tax refunds to their accounts. 

Lew said the aim is to appeal to savers who don't want the risk that comes with other investment options.

The maximum balance for an account is $15,000. At that point, or even any time before, the funds can be transferred to a private-sector Roth IRA.

Participants can withdraw funds from the account at any time, tax-free.

Treasury recently completed a pilot program prompted by President Obama's call in his 2014 State of the Union address directing the agency to develop a first-time-saver program. 

Lew said the program "can give people confidence that they’re taking steps in the right direction, and it can serve as a bridge to other savings options that will carry them the rest of the way."

He said that while the new program won't "solve the nation’s retirement savings gap, it will be an important stepping stone for encouraging and creating a nation of savers."

A Federal Reserve report this year showed that 31 percent of working people said they have no retirement savings or pension. 

Participants can contribute to as little as a few dollars up to $5,500 per year (or $6,500 per year for individuals who will be 50 years of age or older at the end of the year).