Taking the initial steps toward saving for retirement presents a hurdle for many individuals. The novice investor may not know exactly what level of funding is necessary for the various investment options available. Persons who are eligible to fund an individual retirement account can start saving by investing as much as possible in one of the IRA options that requires no specific minimum investment.

Most financial institutions that offer IRAs have a minimum amount that must be deposited to initially open an account. Some IRAs have a low deposit requirement to open an account, but the accounts may require additional deposits on an ongoing, periodic basis. Some retirement accounts may assess a maintenance fee, but even small expenses can add up over the years. A relatively new government-sponsored option can help some savers get started.

The U.S. Treasury myRA

The U.S. Treasury offers its own version of a retirement account to the general public. The account is named myRA and is available to anyone eligible to fund an IRA. The myRA option has no minimum deposit requirement, and there are no fees associated with the account.

A myRA is essentially a Roth IRA, so there is no up-front tax deferral as with a traditional IRA. The advantage of a Roth IRA is that earnings are generally tax-free when received. In fact, the entire Roth distribution is typically tax-free since tax is paid on contributions up front. All myRA funds are invested in the safest government securities.

Contribution limits

The annual contribution limit to an IRA is generally $5,500. If you are age 50 or over at the end of the year, the limit is $6,500. If your income is within certain limits, the contribution to a myRA may qualify for the Retirement Savings Contributions Credit, also known as the saver's tax credit.

Funding with a tax refund

If you prefer, some or all of your federal tax refund can be deposited into a myRA. The account must be set up in advance, ahead of preparing your tax return. There are a few lines near the end of Form 1040 for entering the routing number and account number for your myRA.

Although the myRA option is a safe starter plan, it must be rolled over or withdrawn eventually. The maximum amount that can be saved in a myRA is $15,000. Regardless of the account balance, a myRA cannot be held for more than 30 years. Contact an accountant for more advice on financial planning.

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