Who will Obama's new MyRA account help?

The new "MyRA" new retirement account, announced yesterday by President Obama during his State of the Union address, was aimed at the millions of lower- and middle-income American workers who have no access to employer-provided retirement accounts like 401(k)s and aren't saving on their own. But judging from the few details provided by the White House today, the impact on their retirement security is likely to be small. That is, unless these "starter savings accounts," as the press release calls them, spur nonsavers to significantly ramp up saving on their own.

Here are some details:

•Savers could automatically shift money through payroll deduction from their paychecks—on which they'd already paid tax—to the new accounts. Initial investments could be as low as $25 and contributions as low as $5.

•The investment would be treated like money in a Roth IRA. While the White House didn't say specifically, that would mean that all growth and distributions would be tax-free forever. Employees could move their accumulated MyRA savings to accounts at new employers, or to their own Roth IRAs. Unlike with Roth IRAs and 401(k)s, which penalize most distributions made before age 59 1/2, contributions could be withdrawn penalty-free at any time.

•The accounts would never lose principal. Investors would be assured the same variable interest rate that's provided through the Government Securities Investment Fund in federal employees's Thrift Savings Plan. Last year, the fund earned 1.47 percent before inflation; over the last 10 years, average annual returns were 3.61 percent.

•Workers with household earnings of up to $191,000 could participate.

•Once an account accumulated a maximum, $15,000—or the account was held for 30 years—the holder would have to transfer the balance into a Roth IRA not sponsored by an employer.

•Employers would neither administer nor contribute to the account; they'd merely offer employees the chance to voluntarily participate.

A lot is still not clear

Today President Obama signed and presented an Executive Order to Treasury Secretary Jack Lew to develop the new MyRAs by year-end. Between then and now, though, there are still a lot of questions to be answered.

For example, can an employee start a new MyRA at every new employer? Will employers that currently offer other retirement vehicles—traditional pensions, 401(k)s and 403(b)s, for example—be able to offer MyRAs, and will employees who participate in those plans be able to own MyRAs as well? Will holders be able to pass those accounts to heirs the way they can with Roth IRAs?

Will MyRAs make a difference?

Of greater concern though, is whether the program will really help improve employees' retirement security. Because the maximum balance of a MyRA is small and the rate of return relatively low, these accounts won't have much impact on employees' savings overall. President Obama acknowledged this in calling the MyRA account "a stepping stone to the broader array of retirement products available in today's marketplace." But the fact that the money can be withdrawn so easily seems to work against the concept of saving for retirement as a long-term commitment.

Speaking of the long term, there's something else these fledgling savers will need if they indeed get inspired to save and invest beyond their MyRAs. They're going to need education in making good investment and retirement-planning decisions.

Without those tools, no MyRA or IRA or 401(k) or any other account will help them much in this world where, when it comes to retirement security, most people are scarily on their own.