The U.S. Treasury announced today that it’s closing the Obama-era myRA program, saying that the private sector has decent solutions after all. The myRA program—essentially a starter Roth Individual Retirement Account—was touted as a way to get more Americans saving when it officially launched in November of 2015. Geared toward new savers who didn’t have workplace savings plans (4 out of 10 Americans), a myRA was to get them saving through automatic payroll deductions into an account invested in safe—albeit low-yielding—Treasury debt.
The program failed to gain much traction. Just 30,000 accounts were opened: 20,000 with a median balance of $500, and an additional 10,000 with a zero balance, according to the Treasury Department. Taxpayers have paid nearly $70 million to manage the program since a soft launch in 2014. Additionally, if the program continued, it would cost taxpayers an estimated $10 million a year to manage.
Participants in the program have contributed $34 million to their accounts. Now they’ll have to roll over account balances to a private IRA or close the account. The myRA was meant to be a bridge to a private sector Roth IRA anyway. Once you accumulated a maximum myRA balance of $15,000, your savings was to be transferred to a private-sector Roth IRA. (Watch out: If you close your account and take out cash, any earnings will be subject to income tax. And a rollover should be done direct from the myRA account to your new Roth IRA.)