Turn your tax refund into retirement savings

Tuesday, March 01, 2016

This year, you can get your tax refund directly deposited into an awesome new retirement savings account that is not only free, but also backed by the U.S. Department of Treasury. In 2015, the Treasury Dept. rolled out its new myRA (My Retirement Account). The account is based on the Roth IRA, a savings account featuring tax-free retirement withdrawals.

The Treasury built myRA to create more access to low-cost retirement savings options for everyone, including young people just starting out, people working in food service or retail positions and low-income earners.

Even if your employer doesn’t offer a 401(k) retirement plan or its equivalent, if you change jobs, or if you only have $10 to contribute each payday, you can still have a myRA account.

You can save as much as $15,000 through your myRA account. After you’ve hit the $15,000 mark, you have the option to roll your savings over into a private account (through a financial services provider like Fidelity or Vanguard) in order to continue saving.

A myRA account is convenient and easy to use. You can have the money you invest directly deposited from your paycheck and you can check your balance and manage your account online 24/7. There are no fees or costs associated with opening or maintaining the account. Because myRA is a Roth IRA, you can earn interest on the money you invest, and any withdrawals when you reach retirement age are tax free. (However, if you are eligible for a retirement plan at work, you can’t open a myRA. Also, you must have earned income, but those who earn more than $131,000 for individuals and $193,000 for married couples filing jointly aren’t eligible for myRA accounts.)

So sign up upon completion of your taxes this year (or sign up at any time) at myRA.gov.