Back in 2014, the Obama administration — without the consent of Congress — launched the “myRA” account, intended for Americans who didn’t have access to a retirement vehicle through their employer.
The program was more an exercise in symbolism — government good; Wall Street evil — than in actual retirement planning. Investments were limited to government bonds, ensuring that returns, while protected, were exceedingly low. Taxpayers subsidized the new accounts, given that participants paid no fees and could contribute as little as they wanted to sign up.
Some analysts worried that the proposal foreshadowed mandates favored by many progressives requiring that a percentage of traditional IRA funds be invested in government debt. “That would mean,” suggested investment analyst John E. Girouard in a 2014 Forbes essay, “even more of the nation’s wealth would be locked up and unavailable to start and grow companies, buy homes and make investments that ultimately are the engine of prosperity.”
His fears remain a matter of speculation, however, as the Trump administration last week announced it was phasing out the myRA initiative.
The Wall Street Journal reported over the weekend that weak demand and inefficiencies have plagued the Treasury Department endeavor. Only about 20,000 accounts are currently active, The New York Times reported Friday, with an average balance of $1,700 and a median of $500. Meanwhile, taxpayers have shelled out $70 million over the past three years to manage the program.
Do the math. The Treasury Department could have saved $10 million by simply handing every participant $3,000 to open a Roth IRA at a local bank.
Congressional Democrats are up in arms over the end of myRA, of course. But why should taxpayers continue to sustain a substandard government retirement plan that mimics those already available in the private sector and has not generated enough consumer interest to be remotely viable?
The Treasury Department did the right thing.