Simply put, the new myRA program put forward by Obama is at best a sucker’s deal… or worse, it’s a first step toward the nationalization of private retirement savings. (Note: If you haven’t yet heard of myRA, I’d strongly suggest you read this excellent overview by my colleague Dan Steinhart.)
Even before the new myRA program was announced, there had been whispers about the need for the US government to assume some risk for US retirement accounts. That’s code for forced conversion of private retirement assets into government bonds.
With foreigners not buying as many Treasuries and the Fed tapering, the US government has been searching for new buyers of its unwanted debt. And this is where the new myRA program comes in.
In short, it’s ostensibly a new way for people to save for retirement. Of course, you can only invest in government-approved investments—like Treasuries—which probably won’t even come close to keeping up with the real rate of inflation. It’s like Jim Grant says: “return-free risk.”
I thought this the second I heard MyRA, from the r/personalfinance crowd raving about it.
Although I disagree with this columnists take on protecting it by internationalizing it. That’s simply not going to work. I don’t see a forced conversion. I think the more likely scenario is an “amnesty” situation. Either rollover your 401k/IRA into a MyRA with no penalty, or keep it, and take your penalty, and income tax right now.
Doesn’t matter what’s in that container when the time comes, IMO.
You could always cash in your IRA like I did.
This is something I worry about alot myself. These government types have proven they can not handle social security so now they want to handle my other retirement accounts? I don’t think so, if it comes to that I would rather just take the 60% penalty and just keep the money in my mattress. At least that way I have something, instead of begging my government masters each time I want to take out some of my own money.
The penalty is only applied if you are under 59-1/2. You still pay taxes when you withdraw it. The amount of tax depends on your income on that year. I can tell you that they taxed my penalty also.
David, Thanks. Now if they can hold off for 17 more years I will be able to withdraw it tax free.
But it does seem with each passing day it does not pay to have all your retirement eggs in one basket.
I was four years away but I never looked back. There is no peace like being out of the 1’s and 0’s.
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