Q.  Robert, I recently heard that President Obama is creating a new type of IRA account.  Do you have any information on what this is?  – Bill in Kernersville

A.  Bill, I believe what you are referring to is something called myRA.  I am not as familiar with this particular investment vehicle as others simply due to the fact that it is not something our clients will be using.  Basically, the president has called upon the Department of the Treasury to create government- backed retirement accounts.  These plans are going to be targeted at low and middle-income Americans who don’t have access to employer-sponsored retirement plans.

The current administration says it will “aggressively” encourage employers to offer the program.  Any worker can contribute to the plan, even if they currently have a 401K in place, as long as their household income is less than $191,000 a year.  The way the accounts will work is similar to a Roth IRA.  A Roth IRA allows people to invest their after-tax dollars, and withdraw the money at retirement time tax free.  The key difference between this product and a Roth IRA is that the myRA will be solely invested in government savings bonds. This is done, they said, so the account can never loose principal.  Workers may also keep their plans if they switch jobs.  An individual can contribute from multiple part-time jobs.  As with a Roth IRA, removing interest before the age of 59 and a half can result in taxes and penalties.   However, unlike most 401K’s, the myRA will have no fees.

The last time I looked at this product they were proposing that an initial investment could be as low as $25 or $5 if done through automatic payroll deductions.  The maximum annual contribution will follow the same guidelines as a Roth IRA.  One interesting provision of the myRA is that when the account reaches $15,000 or is 30 years old, the investor has to roll it over to a private sector IRA.  While the idea of safety for the principal is to be commended, I really don’t see much growth potential in the overall strategy

To get more up to date information on the myRA, please go to:

www.myra.treasury.gov.

I would like to take a minute to thank our clients for all of the great referrals you have sent us.  They are always appreciated.

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Robert Cooper, CRPC, RFC 

Investment Advisor Representative

Providing Financial Planning Services in the Triad for Over 20 Years

336-993-2012  •  www.coopercares.com  

935-E Mountain St., Kernersville, NC 27284

Investment Advisory Services Offered Through Global Financial  Private Capital, LLC, an SEC Registered Investment Advisor.

If you would like a complimentary consultation with Robert, call the office at 993-2012.

Robert Cooper and Global Financial Private Capital, LLC do not provide tax or legal advice.  Individuals should seek advice from their own tax or legal counsel for their particular situation.

Any comments regarding safe and secure investments and guaranteed streams refer only to fixed insurance products. They do not refer, in any way to securities or investment advisory products. Insurance and Annuity product guarantees are subject to the claims paying ability of the issuing company, and are not offered by Global Financial Private Capital.