In his State of the Union address on January 28, President Obama announced that he will use his executive authority to direct the Treasury Department to create “myRA”, a starter retirement savings account program.

According to White House Fact Sheet, a myRA will be available to individuals who do not have access to workplace retirement plans with household incomes of up to $191,000 annually. Participants may save up to $15,000, or for a maximum of 30 years, in their accounts before transferring the accounts to a private sector Roth IRA. Amounts in a myRA will be invested in government savings bonds and will benefit from principal protection so the principal investment will not go down in value.

Employers are neither required to administer myRA accounts nor contribute to them. A pilot program for myRAs will be available by the end of 2014 for employees of employers who chose to participate.

The myRA program seems to be the first step in the President’s proposal to increase retirement savings among lower and middle income households. While it is a small step toward the President’s plan for retirement reform, it is one that can be implemented without Congressional approval.