More retirement-related regulatory news for plan sponsors, including links to detailed information.
Treasury issues final rule on “myRA” savings bonds
The Treasury Department’s Bureau of the Fiscal Service has issued a final rule on the savings bond only available for Roth individual retirement accounts established under the “myRA” retirement savings program that the President announced in his 2014 state of the union address. The new electronic savings bond pays interest at a variable rate equal to the weighted average yield of all outstanding Treasury notes and bonds with four or more years to maturity, and thus carries no principal risk. This is the bond that has been available only to federal employees invested in the “G Fund” of the Thrift Savings Plan.
Although the push for myRA accounts has been directed at employees with no employer-sponsored plan, the fact sheet released when the program was announced states that myRAs are “for savers who either do not have access to an employer-sponsored retirement savings plan or are looking to supplement a current plan.” Worker eligibility requirements include annual incomes of less than $129,000 for individuals ($191,000 for couples).
The final rule, which is effective starting on Dec. 15, 2014, sets forth the requirements applicable to the retirement savings bonds issued to the designated Roth IRA custodian for the myRA program on behalf of program participants. Thus, it addresses registration, crediting, limitations on additions, interest, and redemptions; it does not provide guidance on any employer role.
Treasury submission to OMB and comment request on new information collection
The Treasury Department is seeking the Office of Management and Budget’s (OMB) approval for an information collection to inform its administration of a new federal program being launched this year that aims to enable more low- and moderate-income individuals to save for retirement.
As part of its work to launch the program, the Treasury is exploring several approaches for enabling eligible individuals to open and put savings into the retirement accounts, including the option of encouraging individuals to open and fund the accounts when they file their federal tax forms. The Department contracted with the Center for Social Development (CSD) at Washington University in St. Louis to assist with research on this topic. CSD currently administers an annual privately-funded survey, the Household Financial Survey (HFS), through which it gathers savings information from low- to moderate-income tax filers immediately after they have filed their tax forms. This national survey is integrated into the no-cost version of Intuit’s TurboTax tax preparation software, and it reaches a significant sample of people who could be eligible for the accounts.
The information collected through the Treasury-funded Retirement Savings Module of the HFS will provide baseline characteristics, needs, and practices of a segment of the population targeted by the federal program.
For more information, click here.