In 2014, we wrote an article critical of then President Obama’s executive order for the Treasury Department to run a retirement plan called “myRA” which would invest entirely and exclusively in the Treasury Department’s TSP G Fund. Our criticism was primarily that this violated the Employee Retirement Income Security Act (ERISA) laws against self-dealing in retirement plans. As we wrote then:

All government savings bonds, the TSP G Fund included, are debt securities issued by the Department of the Treasury to help pay for the government’s borrowing needs. They pay a below-market rate, and the government benefits from their purchase. It is like a company borrowing money from its pension fund at the expense of their retirees’ returns. It is a prohibited ERISA transaction for good reason. Yet this is precisely what Obama’s myRA requires.

Additionally, plan sponsors must identify potential conflicts of interest and address such conflicts while remaining loyal to their duty to plan participants. Letting participants have the option to purchase an investment vehicle the plan sponsor benefits from is already a conflict of interest. To have a plan in which participants may only purchase securities from the plan sponsor is a serious breach of fiduciary duty.

What I have recently learned is that the Treasury department solicited an opinion from the Obama Administration’s Department of Labor (DOL) if the myRA scheme would be an “employee pension benefit plan” and therefore subject to ERISA. Apparently the DOL argued that myRA activities are immune from application of ERISA requirements, because “we do not believe Congress intended in enacting ERISA that a federal government retirement program created and operated by the U.S. Department of the Treasury would be subject to the extensive reporting, disclosure, fiduciary duty, or other requirements of ERISA… .”

Meaning, the government doesn’t even want to be subject to these government regulations.

Three years later the program, a dismal failure, was closed by the Trump administration. After three years, the program had a total of $34 million in assets. Meanwhile, the taxpayer cost of running the program was $70 million dollars.

That the program failed is not a surprise. That the government decided to close a failed program, however, is.

Photo by Sabri Tuzcu on Unsplash