According to IRS statistics, about 73 percent of individual income taxpayers receive refunds, and the average refund is almost $2,900. However, many fail to save for retirement or save too little. With this in mind, the U.S. Department of Treasury established a simple program where taxpayers can contribute all or a portion of their income tax refund into a starter retirement savings account – a myRA® (my Retirement Account) – through direct deposit.
Tax professionals stand in a unique position to encourage savings at tax time and to share information about these accounts. Here’s what you need to know to advise your clients:
- You must set up a myRA account before making a contribution (see link below).
- The myRA account is geared towards those who don’t have access to a retirement account at their job or lack other alternatives to save.
- The investment is safe and backed by the United States Treasury.
- These accounts cost nothing to set up, and participants realize the deferral benefits of a Roth IRA.
- Account holders also have the option to transfer their money at any time into an actual Roth IRA which offers diverse investment options.