ABA and two other trade groups today commented on the process for transferring the Treasury Department’s new “myRA” account balances to private-sector Roth IRAs, identifying several risks that need to be further investigated before a default arrangement for rollovers can be considered.
“From a service provider perspective, there are inherent risks to having account balances defaulted when an account holder fails to provide instructions for a rollover, and there are certain factors that may make a Roth IRA provider unwilling to be selected to receive automatically transferred myRA balances,” the groups said. “Given these potential challenges, [we]believe there are a number of issues Treasury should take into account before considering any default arrangement.”
Among these risks, the groups identified the difficulties of maintaining accurate customer data as a main point of concern, as well as regulatory complications that could arise if an account holder cannot be located as a result. The groups went on to recommend that Treasury require taxpayer consent to any default arrangement as part of the myRA account opening process, and that customer information –including the name and address of a financial adviser or preferred service provider — also be collected at that time.
First announced by President Obama in 2014, the myRA is a no-fee, no-minimum-contribution personal retirement account that is invested in government securities and designed for those without access to other retirement savings vehicles. Once a myRA reaches a balance of $15,000, it is rolled over to a Roth IRA. For more information, contact ABA’s Phoebe Papageorgiou.