As the 2016 tax season gets underway, the U.S. Department of
the Treasury is encouraging Americans to consider using their federal tax
refunds to boost retirement savings—including through the myRA savings initiative
launched by the outgoing Obama Administration.
materials shared by the Treasury Department, during
2017, individuals can set up automatic direct deposit contributions to a
myRA account through their employers; fund a myRA account directly by
setting up recurring or
one-time contributions from a checking or savings account; and at tax
time, they can direct all or a portion of a federal tax refund to a
When individuals save with a myRA, they may also qualifyfor the Saver’s Tax Credit, which can lower the tax bill or
increase the refund for low- and middle-income workers, the department explains.
Eligible individuals can take the Saver’s Tax Credit by filing Form 8880 or
working with a tax preparer.
Individuals who contribute to a myRA or a Roth IRA with
modified adjusted gross income below certain levels (for 2015, $61,000 if
married filing jointly, $45,750 if head of household, $30,500 if single) may be
eligible to claim a Saver’s Tax Credit for their contributions, according to the Treasury Department. The amount of
the Saver’s Tax Credit can be 50%, 20%, or 10% of retirement contributions, up
to $2,000, depending on income and filing status.
For its part,
the myRA program requires an initial
contribution of at least $25 and automatic ongoing contributions of $5
every pay period, and accounts are available to any individual with an
income of less than $129,000 or a couple with annual income of less than
$191,000. So far few employers or employees nationally have signed on,
but officials remain optimistic that the myRA will catch on.
Outgoing U.S. Treasury Secretary Jacob J. Lew recently
commented on the progress of the myRA program, which opened to the public
around the beginning of 2016, administered by the Dallas-based bank/financial
services provider Comerica. While the myRA remains lightly
utilized and will likely not be a mainstay of anyone’s retirement income plan, Secretary
Lew says it represent a “simple, safe and affordable retirement account.”
He urges Americans who have not started saving to “jumpstart” their financial
future by putting some of their tax refund into a myRA—or any type of savings account.
According to the Internal Revenue Service, eligible workers
still have time to make qualifying retirement contributions and get the saver’s
credit on their 2016 tax returns. Individuals have until the due date for filing
their 2016 return (April 18, 2017), to set up a new individual retirement
arrangement or add money to an existing IRA for 2016. This includes the
Treasury Department’s myRA.