austin3515 Posted January 29, 2014 Posted January 29, 2014 In case you missed the State of the Union: http://blogs.wsj.com/washwire/2014/01/29/nine-things-to-know-about-obamas-myra-accounts/ I was a very mediocre Obama supporter and sort of scoffed mildly at people who suggested maybe Obama wanted to take over every aspect of our lives. I suppose I am beginning to see it more there way. What an exceedingly bad idea... Austin Powers, CPA, QPA, ERPA
ETA Consulting LLC Posted January 29, 2014 Posted January 29, 2014 That would depend on your perspective. I don't think this would impact what is currently in place. It appears to be a target to get a larger percentage of the lower class to save. The upper class (i.e. Warren Buffet) saves every dollar he makes; measure by that fact that his purchased aren't contingent on his next paycheck. If the middle class, saving his more consistent because. This would appear to be something to stimulate the lower-middle to the lower class (measured by wealth) to get in the habit of saving. Personally, I'm constantly telling many of my younger family and friends the importance of saving; even if at a rate of $20 per week. The problem, here, is that many vehicles in the private sector don't support such a low level. Who's going to save $1,040 per year when their 401(k) has an annual account maintenance fee of $100 per year? You're losing 10% already. The myIRA would appear to offer a mechanism to stimulate saving for those situations where the fees charged in doing so is too high of a percentage of the amount being saved. After you get to a relative low amount ($15,000), then you have a considerable amount to roll into the private market place without getting hammered with fees. I imagine that is the thought behind it. I would like to see (and hear) more before passing judgment. Good Luck! CPC, QPA, QKA, TGPC, ERPA
austin3515 Posted January 29, 2014 Author Posted January 29, 2014 From the ASPPA PAC http://secure.elabs10.com/functions/message_view.html?mid=3011233&mlid=255706&siteid=2010000643&uid=f9b0e0fa57 401king 1 Austin Powers, CPA, QPA, ERPA
austin3515 Posted January 29, 2014 Author Posted January 29, 2014 It does impact for a small business owner who would otherwise sponsor a 401k plan but decides not to because of this other option. I have a friend who is a business owner who would do this in a heartbeat. Austin Powers, CPA, QPA, ERPA
ETA Consulting LLC Posted January 30, 2014 Posted January 30, 2014 There is no 'all things to all people'. So, there may be a few small business owners who choose not to do a 401(k) because of this option. That, alone, does not make it bad policy. To suggest that it does would be like suggesting SIMPLE IRAs are bad policy; for no reason other that a TPA losing a potential client. I can appreciate argument, but believe there are other things to consider. Good Luck! CPC, QPA, QKA, TGPC, ERPA
ETA Consulting LLC Posted January 30, 2014 Posted January 30, 2014 From the ASPPA PAC http://secure.elabs10.com/functions/message_view.html?mid=3011233&mlid=255706&siteid=2010000643&uid=f9b0e0fa57 I'm an ASPPA member, but I do not agree with 'all' their lobby efforts. I believe there are merits to the myRA when you consider the population for which it should have the 'most' impact. Good Luck! CPC, QPA, QKA, TGPC, ERPA
12AX7 Posted January 30, 2014 Posted January 30, 2014 An employer would typically choose to sponsor a qualified plan where they see the benefit of doing so. Choosing a myRA or other goverment sponsored option would have no effect on that decision in the same manner as a current IRA option does today. Any SIMPLE IRA or SEP sponsor is a potential client for me tomorrow. Once they get their feet wet, they will jump into the pool sooner or later. ETA Consulting LLC 1
Belgarath Posted January 30, 2014 Posted January 30, 2014 I must say, I find it hard to get too worked up over this. I don't see it as much of a threat to the TPA world. I expect it will not amount to much in the larger scheme of things. Of course, I also predicted that Larry Bird wouldn't be that great as a pro basketball player, and predicted that the Patriots would handily defeat the Broncos in the AFC championship game, so my track record as a prognosticator is suspect at best!
jpod Posted January 30, 2014 Posted January 30, 2014 I think myIRA is a fantastic idea, and i don't think it will have the slightest impact on the number of employer-sponsored plans in existence or to be created in the future. Whether myIRA is actually implemented and if so whether the people it is targeting will use it is another story. ETA Consulting LLC 1
GMK Posted January 30, 2014 Posted January 30, 2014 It does impact for a small business owner who would otherwise sponsor a 401k plan but decides not to because of this other option. I have a friend who is a business owner who would do this in a heartbeat. Really? If your friend who is a business owner can attract and retain good employees without offering a 401(k), she's doing a lot of other things very well. And if a low return, principal-protected savings plan is the best fit for her workforce, then it would be hard to justify adding the personnel, costs, and headaches of sponsoring a 401(k). I'd be surprised if myRA takes away or slows the growth of any business that provides services to qualified plans. (That said, I too was surprised by Larry Bird in the NBA.) As 12AX7 says, it is more likely to increase business over time. And I'm guessing that ASPPA isn't the only PAC that's using this wonderful/terrible idea as a reason to call for more donations.
My 2 cents Posted January 30, 2014 Posted January 30, 2014 Re: Larry Bird comments How long did you remain surprised that he was so good a pro basketball player? One season, one game, one quarter? Most of the surprises with respect to his pro basketball career after a very short time in the league were in connection with some of the remarkable plays he made. That he would be a very successful pro became obvious very quickly. Always check with your actuary first!
BG5150 Posted January 30, 2014 Posted January 30, 2014 ASPPA's big disagreement with the SOTUS is that the President disparaged the current retirement system really only benefited the rich, that they were "upside down retirement tax incentives." I wholeheartedly agree. President Bush went down a similar avenue, albeit it had to do with supplementing/changing the Social Security system. First it was Lifetime Savings Accounts in 2003, then Individual Investment Accounts in 2005. Both ideas went no where. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
BG5150 Posted January 30, 2014 Posted January 30, 2014 Some outlets refer to it as the State of the Union Speech QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
John Feldt ERPA CPC QPA Posted January 30, 2014 Posted January 30, 2014 I just hope that volunteers who provide their own hardware and software will agree to set up the myRA website instead of charging the full fee for these costs to the plan participants.
austin3515 Posted January 30, 2014 Author Posted January 30, 2014 Did they say what the contribution limit is for these accounts? Austin Powers, CPA, QPA, ERPA
Tom Poje Posted January 30, 2014 Posted January 30, 2014 MyRA plans would be subject to a $15,000 maximum balance, after which they will be converted without penalty into IRAs ............................. so then what, you convert and start again???
BG5150 Posted January 30, 2014 Posted January 30, 2014 This just in: US Govn't announces its myRA conduit IRA Rollover product. Thing is, this new IRA has a choice of two investments: a US Postal Service or Amtrack bond. Send a letter or take a train ride and help your account to profitability! QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
austin3515 Posted January 30, 2014 Author Posted January 30, 2014 Can I do $15K a month? Austin Powers, CPA, QPA, ERPA
GMK Posted January 30, 2014 Posted January 30, 2014 Initial investment is $25. Further contributions are $5 minimum ... but you knew that.
My 2 cents Posted January 30, 2014 Posted January 30, 2014 Can I do $15K a month? Wish I could! Haven't seen much material on the proposal, but it appears to be intended to serve as a step into the world of saving for retirement for people with limited ability to save, and that if it converts to an IRA once the balance gets to $15K, wouldn't it be expected that any further retirement savings would be pursued through an IRA? I am somewhat haunted by the comment made earlier "If your friend who is a business owner can attract and retain good employees without offering a 401(k), she's doing a lot of other things very well." I can remember a time when business owners actually had to strive to attract and retain good employees. I can remember a time when new college graduates could find work with greater career potential than bicycle messenger or convenience store clerk. 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! K2retire 1 Always check with your actuary first!
austin3515 Posted January 30, 2014 Author Posted January 30, 2014 I will reserve judgment on whether or not this means competition until I find out what the max is. Presumably it will not be higher than an IRA contribution, in which case I would agree that maybe this won't be so bad. As a matter of policy, the same friend I referenced above who employs a lot of "low skill/low pay" employees has offered to hundred of employees over the past 3 years the opportunity to have payroll deduction IRA's and not one has taken the option. You can't get water out of a stone is an old adage that comes to mind... Austin Powers, CPA, QPA, ERPA
GMK Posted January 30, 2014 Posted January 30, 2014 According to this: http://money.cnn.com/2014/01/29/retirement/myra-accounts/ myRA will be (is?) a Roth (after tax contributions, tax free withdrawals), and the annual limit is $5,500. didn't read enough to know if there are catch-ups for us old people.
401_noob Posted January 31, 2014 Posted January 31, 2014 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.
Kevin C Posted January 31, 2014 Posted January 31, 2014 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
K2retire Posted January 31, 2014 Posted January 31, 2014 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.
BG5150 Posted January 31, 2014 Posted January 31, 2014 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, ERPATwo wrongs don't make a right, but three rights make a left.
GMK Posted January 31, 2014 Posted January 31, 2014 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.
david rigby Posted January 31, 2014 Posted January 31, 2014 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.
Tom Poje Posted January 31, 2014 Posted January 31, 2014 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.
Kevin C Posted February 3, 2014 Posted February 3, 2014 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.
cdavis25 Posted February 4, 2014 Posted February 4, 2014 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.
austin3515 Posted February 4, 2014 Author Posted February 4, 2014 Here is the IRS's explanation: http://www.treasurydirect.gov/readysavegrow/start_saving/retirementaccountfactsheetenglish.pdf Austin Powers, CPA, QPA, ERPA
BG5150 Posted February 4, 2014 Posted February 4, 2014 So, even though this is aimed at people not covered my an employer plan, it's still incumbent upon the employer to participate in the program. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
masteff Posted February 4, 2014 Posted February 4, 2014 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
austin3515 Posted February 4, 2014 Author Posted February 4, 2014 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
david rigby Posted February 5, 2014 Posted February 5, 2014 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.
masteff Posted February 5, 2014 Posted February 5, 2014 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
austin3515 Posted February 5, 2014 Author Posted February 5, 2014 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
BG5150 Posted February 5, 2014 Posted February 5, 2014 Whose job is it to monitor the YTD total? What if you switch jobs? At $20 a pay, it would seem tough to keep track all the time. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
ESOP Guy Posted February 5, 2014 Posted February 5, 2014 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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