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A Not-So-Worthy Competitor: Uncle Sam's myRA


austin3515

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If you want to worry about government promoted competition, you are looking at the wrong proposal. Look at the USA Retirement Funds Act proposal.

http://www.help.senate.gov/newsroom/press/release/?id=841825d1-509e-4934-9d7e-968d0853b795&groups=Chair

That's just one of the proposals they have been looking at for several years. The following link is for a GAO report is from 2009. Page 74 pdf (page 69 of the report) the pdf has the summary of the proposals they studied.

http://www.gao.gov/assets/300/294311.pdf

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So what would be the benefit of having a myRA opposed to just starting an IRA at a bank or credit union? Call me crazy, but this just seems like a way for the government to dip its hands into the pool, just like Social Security.

I think the intention is for the benefit to be access to the low cost/low risk underlying investment. One piece that I read indicated it would be one of the funds available in the Federal Thrift Savings Plan. Those funds are often mentioned as examples of a low cost, reliable investment option.

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So what would be the benefit of having a myRA opposed to just starting an IRA at a bank or credit union? Call me crazy, but this just seems like a way for the government to dip its hands into the pool, just like Social Security.

One of the reasons given was the low cost for entry to a myRA. You can start with as little as $25. What IRA provider is going to open up one for $25?

Can you make payroll deductions to an IRA? You can with a myRA.

QKA, QPA, CPC, ERPA

Two wrongs don't make a right, but three rights make a left.

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I can remember a time when new college graduates could find work with greater career potential than bicycle messenger or convenience store clerk.

And if you're old enough, you can remember previous times when they couldn't. And that was when you could generally equate "degree" with "well educated," and when kids were not told that they were of no value if they didn't go to college. End of abbreviated rant.

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I can also remember banks and gas stations giving away toasters and drinking glasses and other goodies to attract customers. Guess I'm showing my age!

I can remember the words to the Gilligan's Island theme song.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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My kids (11 & 13) were watching Gilligan's Island when I got home on Friday. They have DVDs of all three seasons. Get Smart is another of their favorites.

Some of our local broadcast TV stations have Retro channels where they play a lot of the old shows. Most of the time, when our TV is on, it's on one of the those channels.

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I don't think this is a threat to the TPA or qualified Plan world. I don't see the advantage of myRA vs a Roth IRA, besides a no penalty withdrawal, which defeats the purpose of savings. Stupid is stupid does right Forest? The return on your IRA will be better than the myRA (since they are limiting your investments) and you would have more (on avg) in the IRA vs the myRA in a couple of years. My concern is there is no such thing as a free lunch. Who is paying the cost to recordkeep and oversee the myRA? It just seems like you are adding another vehicle to the parking lot, which will confuse people even more.

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So from the fact sheet that Austin linked to just above, 2nd paragraph 1st sentence: the MyRA is a Roth IRA.

The novel thing is the Treasury Department directly offering any type of IRA account. People have asked for a number of years to be able to set up IRA accounts at TreasuryDirect.gov

Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra

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I'm envisioning a recordkeeper style platform where the employer keys in peoples contributions. What happens when there is an over-deposit or the money gets into the wrong account? Is there good customer service?

[note: please read the last question with the intended level sarcasm, dripping like an Eskimo in the Sahara dessert).

Austin Powers, CPA, QPA, ERPA

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I'm surprised that most people have missed the important (policy) objective: no fees. Yes, this means that taxpayers are subsidizing the administration (and, as Austin points out, the "customer service"), but that's is precisely why it has a limit: when your account gets large enough, you no longer need the subsidy.

While I often disagree with "government help", this one has lots to recommend it, with its current limitations. Note to government readers: more is not better.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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I was about to speculate on an ulterior motive for this program, that this is a way to develop a recording keeping infrastructure of suitable size to then modify Social Security into individual accounts... but then I realized the government has the Thrift Savings Plan so they have that infrastructure already.

Although, they don't have the infrastructure for pay period reporting and contributions from private sector employers. Having worked at a corporation w/ 4500 employees on bi-weekly and semi-monthly pay cycles, I can say that just reporting a single source of contributions would take some effort to get running on a correct and consistent basis.

So I'm back to my initial theory: this a baby step toward a modification of Social Security.

Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra

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To me, it seems like the federal thrift plan with an infinite number of complications. Receiving contributions from thousands of employers (potentially)? There is a reason that recordkeepers base pricing on average account balance. It's a lot of work!!

Austin Powers, CPA, QPA, ERPA

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was playing Gilligan's Island Pinball on the computer just the other day. Almost every pinball is available, and those bring back a number of memories from the college days, though maybe the term 'pinball' and 'record' are unknown to some.

My daughter when she was real young did describe records as "those really big CDs people used to use".

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