MyRA Phase-Out Briefly Clips a State-Run Auto-IRA Program
The U.S. Treasury’s winding down of the myRA program will cause at least one state-run retirement program to delay its opening.
Washington State’s Small Business Retirement Marketplace — which had hoped to be open for business by Labor Day — will be delayed at least a few weeks, according to a Bloomberg BNA report citing comments from Carolyn McKinnon, director of the Washington marketplace.
The state statute that established the marketplace required that financial services firms participating in it to offer the U.S. Treasury Department’s myRA program as an option. On July 28, however, U.S. Treasurer Jovita Carranza announced that Treasury will be phasing out the program “over the coming months” since the demand for myRAs has been extremely low.
The myRA would have been the only free-of-charge retirement plan option in the Washington State program, which provides businesses with 100 or fewer employees a place to select retirement plan providers for their workers.
Unlike most of the state-run retirement programs for private sector workers launched this far, the Evergreen State’s plan is voluntary — small businesses may choose whether or not to offer marketplace plans to their workers, and workers may choose whether or not to participate. Private financial firms which join the marketplace must agree not to charge administrative fees on employers and to keep investment management fees at or below 100 basis points. New Jersey is the only other state to launch a marketplace approach, but has yet to set a launch date.