Obama’s New Method to Help Low Income Bracket Employees Reviewed by Sense Financial, Said to Lack Important Features of 401k for Individuals

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Almost 50% of the US workers’ population don’t have a retirement plan while a staggering 75% of part time workers are also not enrolled in any retirement program. This leads the government to propose a new method for low income bracket with features similar to ROTH IRA and 401k for Individuals but the option for account owners to choose investment opportunities are overlooked and paying low rate of return below inflation.

With myRA, account holders are forced to invest in the US Treasury Securities paying low rate of return below inflation.

In the recently held State of the Union Speech by President Obama, myRa has been proposed as a new method to save for retirement and it works like the 401k for individuals and ROTH IRA in which the contributions are taken after tax and withdrawals will be tax-free. Contribution starts with $5 as minimum payment and the proposed new method will be made available to qualified employees of businesses that belong to non 401K companies or don’t provide their employees with 401K or any other retirement plans. Employees who wish to avail myRA can make their own contributions taken directly from their payroll accounts. This is upon the voluntary cooperation of their respective employers.

A private third party company is said to manage the accounts but myRA will remain a government account having its entire balance automatically invested into the U.S Treasury Securities that could earn about 2.5% a year. Account owners will hold no options on the investment decisions unlike in 401 k plans for self employed where diverse investment options are presented. Dmitriy Fomichenko, President of Sense Financial says “Self-Directed Solo 401k plan remain to be the best choice for most consumers because of its unlimited investment options and total control." Even though the government promises that no fees will be required when setting up these accounts,
Mr. Fomichenko noted that "With myRA, account holders are forced to invest in the US Treasury Securities paying low rate of return below inflation".

Comprehensive details on myRa have not yet been discussed, but since it is somewhat similar to ROTH IRA, the program can be presumed to have the same maximum annual contribution which is $5,500 for 49 years of age and below while $6,500 for 50 years old and beyond. It is also stipulated that when account reaches $15,000 it will then be transferred to a private ROTH IRA account. With this in mind, myRa can be considered a kind of starter account going to another retirement account or an auto-IRA account once it reaches its maximum of $15,000.

Since the proposal has been recently told and creating debates in the financial sectors, individuals are curious on how an account owner can get access on their savings before retirement. Secretary of Treasury, Jack Lew said that the contributions can be withdrawn any time as opposed to what President Obama mentioned on his speech that myRa funds can be withdrawn on emergency. MyRa has similar implementations with ROTH IRA and that of 401k for self-employed, which could possibly mean that rules on withdrawal of contribution may also apply. More details are yet to be discovered for this method as President Obama has tasked the Treasury department to create rules for myRA accounts.

Sense Financial is California's leading provider of retirement accounts with "Checkbook Control": the Solo 401k and the Checkbook IRA. Over the years, they have assisted hundreds of clients obtain checkbook control over their retirement accounts while providing them with the ability to invest in virtually any investment class, including real estate, private lending, mortgage notes and much more without the need for custodian approval.

To learn more about the solutions they provide, please contact: (949) 228-9393.

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Jessica Santo
SenseFinancial.com - Retirement Accounts with Checkbook Control
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