NEW YORK – (January 29, 2014) -More than 50 percent of U.S. residents are not saving enough money to maintain their current standard of living when they retire even with the assistance of Social Security benefits. In his State of the Union address Tuesday, President Obama proposed a new retirement program, MyRA, to address that.
While all the specific details of the plan – which would allow workers to automatically direct a certain portion of their income
into 30-year savings bonds, tax-free - haven’t been released yet, a group of New York State Society of CPA members offered various reactions.
“The concept sounds great and it has the potential to build a foundation for people to begin saving for their retirement,” said David Young, CPA and a member of the NYSSCPA’s Rochester Chapter. “The challenge could be in the implementation for the employers and employees. The cost of the implementation and administration may outweigh the benefit gained from the “My RA” program.”
Another NYSSCPA member Catherine Censullo, a CPA and financial planner was concerned about the rate of return. “The bonds will have very small returns, which are not good for keeping up with inflation over the long term growth, but participants will not have to worry about losing their money invested,” she said.
“My other concern is that it will be too easy to take the money back out, which may defeat the purpose of putting money away and not touching it before retirement. What remains to be seen is how the plans will be structured and what the incentive will be for employers to participate in the plan,” Censullo said.
Another certified financial advisor shared his concerns.
“President Obama's "MyRA" is another simple-minded response to a serious problem afflicting our nation's citizenry,” said Daniel G. Mazzola, CFA, CPA.“Is is appropriate to encourage people to invest in long term Treasury bonds in a climate of historically low interest rates? “
“Will the money deducted be placed in a separate account for each individual or a general trust fund like the Social Security Trust Fund with which the government has access and can use for general expenditures?” he asked.
According to published news reports, the President’s plan is aimed at workers making less than $191,000 a year, it won't have tax penalties for withdrawing investments, and the initial investment could be as low as $25 with subsequent investments being as low as $5 per paycheck.
Once someone has $15,000 or more, or have had the same account for 30 years, then it would need to be rolled over into a private run IRA. It would offer the same variable-interest rate return as the Thrift Savings Plan Government Securities Investment Fund, which handles the retirement benefits of federal employees, according to the Wall Street Journal.
The initiative does not need legislative approval, as the President will direct the Treasury Department to create the program as an executive order.
“Is the President unaware that it is relatively easy for a private sector worker to establish an IRA at a local bank or brokerage house?” Mazzola asked. “Making it easier for people to set aside money for retirement is a small measure when compared to providing an overall environment in which they have an opportunity to be successful.”
For more information or to schedule an interview with these NYSSCPA members, please contact Alonza Robertson at
arobertson@nysscpa.org or call 212.719.8405
About the NYSSCPA
Founded in 1897, the NYSSCPA is the premiere professional accounting association for more than 29,000 certified public accountants residing and practicing in New York State, encompassing all areas of public practice, including in government, education, and industry. Visit our website,
www.nysscpa.org, for more information.