WASHINGTON – President Barack Obama is offering more Americans the chance to put away money for retirement through payroll deductions with a plan for new government-sponsored savings accounts.
The accounts, which Obama announced Tuesday in a State of the Union address that concentrated on expanding economic opportunity, will be aimed at workers who don’t have access to a 401(k) plan, administration officials said.
The “MyRA” plans, similar to individual retirement accounts, will provide “a new way for working Americans to start their own retirement savings,” Obama said.
Under the proposal, workers could have part of their pay deducted for deposit into an account invested in U.S. government bonds that would be treated for tax purposes as a Roth individual retirement account, with future earnings tax-free. The accounts would be open to people with annual household income up to $191,000 whose employers choose to participate, according to a White House fact sheet.
Initial investments could be as low as $25 and payroll contributions as low as $5. The plans, set up through the Treasury Department, would have a maximum balance of $15,000, after which money would have to be rolled over into a private-sector Roth IRA, the fact sheet said.
Laurence D. Fink, CEO of BlackRock Inc., the world’s largest asset manager, said in a statement Tuesday that he’s “tremendously encouraged” by a proposal he said he hoped would “kick off a much-needed national conversation” on retirement security.
The officials, who briefed reporters on condition of anonymity before Obama’s nationally televised speech, projected that millions of Americans would take advantage of the savings accounts. Participation would be voluntary and principal contributions will be guaranteed under the plan.
The president can establish the savings program under existing executive authority without new legislation, the officials said. Obama will announce details of the proposal on Wednesday during a visit to Pennsylvania, according to the fact sheet.