Setting up a myRA account is an affordable and FREE retirement savings account provided and backed by the U.S. Treasury. A myRA retirement savings account is available to any American citizen who is 16 years or older, make less than $129,000 or couples making less than $191,000, and works part time or full time. One major benefit to this type of retirement account is its portability. It isn't tied to a single employer. This helps individuals who are inexperienced with retirement plans stick to a savings program.
There are a few requirements to open a myRA account. You must provide your SSN, a state ID, and give a name and birthday of a beneficiary. The retirement account works similar to how one would set up a direct deposit to a checking account. You give your employer your myRA account and routing number, determine how much you would like to deduct from each paycheck, and payroll will directly transfer the cash to your myRA account. Even if your employer doesn't offer direct deposit, you can link your checking account to your myRA account and setup either a one time or a recurring contribution. After 5 years of contributing $40 a month into the retirement account, you will have saved over $2,500!
What if you need some cash? This is a Roth IRA account, so any money contributed by the individual is after tax money and can be distributed (taken out) tax-free and penalty free, anytime. For withdrawing earned interest with no fees or penalties, the employee must wait 5 years or until they are at least 59 ½. The individual is responsible for making and managing their retirement account. Withdrawing money, transferring account information from employer to employer, and choosing contributions are up to the account holder, not the employer.
You can't have this account forever. When the saver contributes $15,000 or has had an account for 30 years, the funds will stop earning interest and either be rolled into a private sector Roth IRA account or cashed out to the individual.
Remember, this is only used as a beginner account. So if you're a more experienced investor with higher earned interest, this may not be the best option for you. As always, be financially responsible and do your research before investing your hard earned cash!