9/24/2014

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The White House
Office of the Press Secretary

For Immediate Release January 29, 2014

FACT SHEET: Opportunity for All: Securing a Dignified
Retirement for All Americans

Creating the “myRA”— a Simple, Safe, and Affordable Starter Savings Account to Help Millions of Americans Start
Saving for Retirement

Year of Action: Making Progress Through Executive Action *

To build lasting economic security, the President will act on a set of specific, concrete proposals to expand
opportunity for all Americans. In the State of the Union, the President announced that he will use his executive
authority to direct the Department of the Treasury to create “myRA” — a new simple, safe and affordable “starter”
retirement savings account that will be offered through employers and will ultimately help millions of Americans
begin to save for retirement.

Starter Savings Account: Making It Easier to Start Saving for Retirement. This new product will be
targeted to the many Americans who currently lack access to workplace retirement savings plans, which is
usually the most effective way to save for retirement. Starting to save is just the first step towards a secure
retirement, and the President wants to help more Americans save for their future.

Safe and Secure: Principal Protection So Savers’ Account Balance Will Never Go Down. The product
will be offered via a familiar Roth IRA account, and savers will benefit from principal protection, so the
account balance will never go down in value. The security in the account, like all savings bonds, will be

backed by the U.S. government. Contributions can be withdrawn tax free at any time.

User-Friendly for Savers: Portable Account with Contributions that Are Voluntary, Automatic, and
‘Small. Initial investments could be as low as $25 and contributions that are as low as $5 could be made
through easy-to-use payroll deductions. Savers have the option of keeping the same account when they
change jobs and can roll the balance into a private-sector retirement account at any time.

Favorable Investment Return: Same Secure Investment Return Available to Federal Employees.
Savers will earn interest at the same variable interest rate as the federal employees’ Thrift Savings Plan
(TSP) Government Securities Investment Fund.

Widely Available: Available to Millions of Middle Class Americans Through Their Employer. This
saving opportunity would be available to the millions of low- and middle-income households earning up to
$191,000 a year. These accounts will be offered through an initial pilot program to employees of employers
who choose to participate by the end of 2014. The accounts are little to no cost and easy for employers to
use, since employers will neither administer the accounts nor contribute to them. Participants could save up
to $15,000, or for a maximum of 30 years, in their accounts before transferring their balance to a private
sector Roth IRA.

Make Sure That All Americans Can H:

d Retirement *

The President remains committed to working with Congress to help secure a dignified retirement for all Americans.
While Social Security is and must remain a rock-solid, guaranteed progressive benefit that every American can rely
on, the most secure retirement requires a three-legged stool that includes savings and pensions. That's why the
President is using his executive authority to create the ‘myRA” and has already proposed to work with Congress on
the following proposals to help Americans save for their retirement:

+ Giving Every Employee Access to Easy, Payroll-Based Savings Through the Auto-IRA. About half of all
American workers do not have access to employer-sponsored retirement plans like 401(k)s, which puts the
onus on individuals to set up and invest in an Individual Retirement Account (IRA). Up to 9 out of 10 workers
automatically enrolled in a 401(k) plan through their employer make contributions, even years later, while
fewer than 1 out of 10 workers eligible to contribute to an IRA voluntarily do so. The President's budget will
propose to establish automatic enrollment in IRAs (or “auto-IRAs") for employees without access to a

FACT SHEET: Opportunity for All: Securing a Dignified Retirement for All Americans | The White House

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9/24/2014 FACT SHEET: Opportunity for All: Securing a Dignified Retirement for All Americans | The White House

workplace savings plan, in keeping with a plan that he has proposed in every budget since he took office.
Employers that do not provide any employer-sponsored savings plan would be required to connect their
employees with a payroll deduction IRA. This proposal could provide access to one-quarter of all workers,
according to a recent study.

Making Sure the Auto-IRA Works for Workers and Small Businesses. Workers would not be required to
contribute and are free to opt out. Employers would also not contribute. The plan would also help defray the
minimal administrative costs of establishing auto-IRAs for small businesses, including through tax
incentives,

Removing Inefficient Retirement Tax Breaks for the Wealthiest While Improving Them for the Middle
Class. The Auto-IRA will spread the tax benefits for retirement savings to millions more middle-class
Americans. Current retirement tax subsidies disproportionately benefit higher-income households, many of
whom would have saved with or without incentives. An estimated two-thirds of tax benefits for retirement
saving go to the top 20% of earners, with one-third going to the top 5 percent of earners. Our tax incentives.
for retirement can be designed more efficiently. According to one 2012 study, additional tax expenditures.
are a comparatively inefficient way to generate additional saving. The President has proposed to limit the
benefits of tax breaks, including retirement tax preferences, for high income households to a maximum of 28
percent. The President has also proposed to limit contributions to tax-preferred savings accounts once
balances are about $3.2 million, large enough to fund a reasonable pension in retirement.

* Importance of Securing a Dignified Retirement for All Americans *

Many Americans lack access to workplace retirement savings plans — usually the most effective and
generous means of saving for retirement. About half of all workers and 75 percent of part-time workers,
lack access to employer-sponsored retirement plans.

The financial crisis dealt a severe blow to the retirement outlook for many families, wiping out more
than $12 trillion dollars in household wealth. While financial markets have returned to their pre-crisis levels,
median household wealth has only recovered 45 percent of the losses during the recession

The risk of an insecure retirement is especially great for women, minorities, and low-income
Americans. Women continue to be less prepared for retirement than men and comprise 63 percent of the
elderly living below the poverty line. White households have six times the wealth, including retirement
savings, of African Americans or Hispanics. And low-wage and part-time workers are just one-third as likely
as high-wage and full-time workers to participate in an employer-based retirement plan.

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http://www.whitehouse.gov/the-press-office/2014/01/28/fact-sheet-opportunity-all-securing-dignified-retirement-all-americans