your tax dollars hard at work running IRAs'

[Tom Poje]

of course the govt can always run things cheaper!

 

The Treasury Department said Friday that it will end an Obama-era program called myRA that created accounts aimed to help Americans start saving for retirement.

After about three years, just 30,000 people had opened a myRA, and of those only 20,000 people had saved money in the account, the Treasury Department said.

The program has cost taxpayers $70 million so far, according to Treasury, and was expected to cost $10 million annually going forward.

"Unfortunately, there has been very little demand for the program, and the cost to taxpayers cannot be justified by the assets in the program," said U.S. Treasurer Jovita Carranza in a statement.

In total, myRA account holders have saved $34 million to date.

[david rigby]

Quote

American taxpayers have paid nearly $70 million to manage the program since 2014.

Perhaps this statement from the press release is the most alarming aspect to this program.

[MoJo]

1 hour ago, Tom Poje said:

of course the govt can always run things cheaper!

 

The Treasury Department said Friday that it will end an Obama-era program called myRA that created accounts aimed to help Americans start saving for retirement.

After about three years, just 30,000 people had opened a myRA, and of those only 20,000 people had saved money in the account, the Treasury Department said.

The program has cost taxpayers $70 million so far, according to Treasury, and was expected to cost $10 million annually going forward.

"Unfortunately, there has been very little demand for the program, and the cost to taxpayers cannot be justified by the assets in the program," said U.S. Treasurer Jovita Carranza in a statement.

In total, myRA account holders have saved $34 million to date.

From the source you cite:

"It's a paltry number when compared to the roughly 55 million workers who don't have access to an employer-sponsored retirement plan.

But some retirement experts predict the number of enrollees will start rising fast.

"I think Treasury was taking a very careful, measured approached to make sure everything works -- but the future of myRA is very bright," said John. [emphasis added]

He expects awareness of the program to grow, bolstered by new state programs that promote myRA. The Treasury Department said it will do more next year to highlight myRA on government websites, as well as promote it through TurboTax."

Consider the current administration's view of anything created by the past administration.....

[RatherBeGolfing]

An average MyRA savings of $1,700 at an average taxpayer cost of $3,500...  

[MoJo]

23 minutes ago, RatherBeGolfing said:

An average MyRA savings of $1,700 at an average taxpayer cost of $3,500...  

Start-up costs for a program in operation for only a year.  What does it cost to acquire and set up a 401(k) plan?  We price on the basis of a five year break-even point.

On-going cost for the program were estimated to be $10 million annually.  Assuming no other enrollees, that would be $500 per account - assuming no other enrollees.

The problem is, no "financial service provider" will talk to you when you only have small amounts of money.  Merrill Lynch has a hard $250k minimum.  Smith Barney is higher than that.  The "self service" brokers (ETrade, etc.) don't provide any guidance and basically turn you loose to the investment world - and they charge fees on small balance accounts as well.

[ESOP Guy]

1 hour ago, MoJo said:

Start-up costs for a program in operation for only a year.  What does it cost to acquire and set up a 401(k) plan?  We price on the basis of a five year break-even point.

On-going cost for the program were estimated to be $10 million annually.  Assuming no other enrollees, that would be $500 per account - assuming no other enrollees.

The problem is, no "financial service provider" will talk to you when you only have small amounts of money.  Merrill Lynch has a hard $250k minimum.  Smith Barney is higher than that.  The "self service" brokers (ETrade, etc.) don't provide any guidance and basically turn you loose to the investment world - and they charge fees on small balance accounts as well.

There are plenty of solid, low cost mutual funds that will set up an IRA for $1,000. 

I would add this program only offered one terrible invest.  You could invest US Treas that paid a little over 2%.  The cost for one investment option that is the government's own bonds should have been much lower then the numbers we are seeing. 

[MoJo]

On 7/28/2017 at 5:34 PM, ESOP Guy said:

There are plenty of solid, low cost mutual funds that will set up an IRA for $1,000. 

I would add this program only offered one terrible invest.  You could invest US Treas that paid a little over 2%.  The cost for one investment option that is the government's own bonds should have been much lower then the numbers we are seeing. 

First, that $1,000 IRA doesn't tell you the costs associated that the provider is "eating" to get the account.  Compare apples to apples.

Second, $1,000 is a lot for many - that's why the program was created. Keep in mind a HUGE percentage of the population doesn't have $1,000 laying around to cover even minor emergencies when they crop up.

Third, the myRA program was for people who did not have access to traditional financial services - and could build an account over time that could then be moved to a more traditional choice - with options.

Third, it was only in operation for a little more than a year....

Finally, if we are ever going to get to the point that the vast majority of people in this country are self-sufficient in retirement, we have to have a solution that provides financial vehicles for those with little to begin with.  The mantra I've been hearing (and repeating) is it isn't so much what you invest in, but rather how much you save that counts.

Got to start somewhere.

[CuseFan]

So what's the over/under on how long until one of the aggressive excessive fee attorneys brings a class action lawsuit against the government on behalf of tax payers for this failed costly program?

[MoJo]

1 hour ago, CuseFan said:

So what's the over/under on how long until one of the aggressive excessive fee attorneys brings a class action lawsuit against the government on behalf of tax payers for this failed costly program?

Against the government for what?  Not sure I'd call this "failed" or "costly" - but even so, would you like a laundry list of "failed" defense department programs that cost not in the millions, but in the billions?

[My 2 cents]

1 hour ago, MoJo said:

Against the government for what?  Not sure I'd call this "failed" or "costly" - but even so, would you like a laundry list of "failed" defense department programs that cost not in the millions, but in the billions?

I have to agree with MoJo - the idea of the government being subjected to fiduciary standards with respect to how it spends money, irrespective of one's politics, is so absurd as to fall entirely outside the realm of possibility.  Where would one start?  Just consider that the military spends more every year on viagra than the cumulative expense for the myRA program.

The only possible arena for an "aggressive fee attorney" with respect to myRAs would be if they bore 5% annual service fees.

[CuseFan]

Sorry, my comment was more tongue in cheek slam against the attorneys reaping millions by getting plan participants, individually, tens and hundreds rather than government waste. Clearly that sort of discussion can last us the rest of the year. Or maybe it's all a government conspiracy to fund extraterrestrial research. As they said in Independence Day: You didn't think they actually spent ten thousand dollars for a hammer and thirty thousand for a toilet seat, did you?

[TPAJake]

I appreciate MoJo's position, as I too believe we need to concentrate more on "everyman" if we're ever going to make a dent in the retirement crisis is America.  However, this program was never a good idea & there's plenty of places to put your money these days.  Betterment.com will open an IRA with no minimum, set up recurring deposits for you, do all your trading & tax reporting, etc., all for .25%.  I opened an account with them about 6 months ago as a little experiment, so I could speak intelligently to the Participants who call me every day & it's up 6.5% as of today--I don't ever have to touch it, they do everything.  There's a few others using this same model & most of the big names in the industry are currently launching similar products.  The gov't has plenty of unfinished business to attend to, they should start there.

[Bill Presson]

On 7/28/2017 at 3:28 PM, MoJo said:

The problem is, no "financial service provider" will talk to you when you only have small amounts of money.  Merrill Lynch has a hard $250k minimum.  Smith Barney is higher than that.

Smith Barney has been gone for several years now.

[MoJo]

1 minute ago, Bill Presson said:

Smith Barney has been gone for several years now.

Gone but not forgotten....  Substitute "Morgan Stanley"....

[david rigby]

Reconsidering the original press release, that $70 million cost seems so breathtakingly large as to be doubtful.  My hunch is someone arrived at that number by including extra costs unrelated to the program (such as, the full cost of employee X when that employee only spent 20% of his/her time on the program).  I don't have any real data to support this (which is why it's a hunch), just observing that stretching the truth is not uncommon in DC.

[MoJo]

38 minutes ago, david rigby said:

Reconsidering the original press release, that $70 million cost seems so breathtakingly large as to be doubtful.  My hunch is someone arrived at that number by including extra costs unrelated to the program (such as, the full cost of employee X when that employee only spent 20% of his/her time on the program).  I don't have any real data to support this (which is why it's a hunch), just observing that stretching the truth is not uncommon in DC.

Guvmint accounting is in fact different from "regular" accounting - and you raise a good point.  Any accountants out there who specialize in governmental accounting practices?