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Britt Erica Tunick is an award winning financial journalist who has spent the past 17 years writing about virtually every aspect of finance. She has mastered the art of boiling down complicated financial topics for readers to understand. |
Check out the easy to use myRA and start saving for your retirement. With a low opening investment and the ability to deposit on your terms, myRA is changing the way we save for retirement. Not All IRAs are Created Equal By Britt Erica Tunick You may not be surprised to learn that starting an individual retirement account is not the first thing, or even the second or third, that most people in their early 20s do once they land their first job. With retirement seeming like something that is almost too far off to worry about, the idea of locking up money until the age of 66, or facing a penalty for taking it out before then, is not attractive. Believe it or not, however, the government has created the most user friendly IRA to date that is designed to get new entrants into the workforce to begin saving for retirement as early as possible. Because of the fact that few Americans have pensions and many work for companies that do not offer 401ks, in November 2015, in an effort to encourage people to save for retirement, the government launched myRA. The myRA program gives people the opportunity to invest in Treasury bonds housed within a Roth IRA. Like traditional Roth IRAs, taxes on the money invested into myRAs are paid up front, leaving any earnings that accrue after that to do so on permanent tax free basis, including when the money is ultimately withdrawn. But unlike traditional Roth IRAs, which usually have to be opened with an investment of a few hundred dollars or more, a myRA account can be opened with just $25, after which additional contributions can be as low as $5 and can be made at any time. And if money is withdrawn from the account before the owner reaches retirement age, there is no penalty fee for doing so. MyRAs are available to individuals whose total household income is under $191,000 and, just as with traditional IRAs, the maximum that can be contributed during any calendar year is $5,500 including any money put into traditional Roth or plain vanilla IRAs. Once the savings within a myRA totals $15,000, or the account owner turns 30 years old, the savings vehicle will automatically roll into a private-sector retirement account. |
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