Last month, the Treasury Department announced plans to wind down the myRA program, an Obama-era initiative designed to help low- and middle-income earners start a retirement account. According to the July 28 press release, the Treasury could not justify the expense the three-year-old program represented to taxpayers, given the slow uptake of the program among its target demographic: the 55 million Americans who lack access to a workplace retirement plan.
The argument against myRA’s expense is hard to swallow, since the next item on President Donald Trump’s agenda is a tax reform plan that could cost as much as $7 trillion over the next decade. The myRA program would be 0.001 percent of the cost. The claim that enrollment has been unenthusiastic isn’t much easier to stomach, since the program was so new. Publicity efforts, such as partnerships with Volunteer Income Tax Assistance programs and promotions through government websites and TurboTax, have not yet been executed.
In reality, it was a deeply practical, badly needed program. I spent this past tax season working with United Way of King County to expand the savings options available to low-income taxpayers in Seattle. Tax time is one of the only times a year that saving is a real possibility for low-income earners — their tax refunds are often the largest lump-sum payment they receive all year. Asking clients a question as simple as, “Are you considering saving a portion of your refund today?” was enough to spark a meaningful conversation about budgeting, savings, and overall financial stability. Tax clients had the option of splitting their refund into a savings account, savings bond, or myRA, which was piloted at United Way’s tax sites for the first time this season.
For middle- and upper-income earners, retirement programs are an assumed benefit.
myRA was a great fit for clients who were new to saving. The accounts had no minimum balance required, no fees, and no risk of losing money. Account holders could withdraw…