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imageFrom praise to scorn was the reaction on Wall Street to President Obama’s announcement in his State of the Union address of the new MyRA retirement plan for low- to middle-income Americans.

But one thing is for sure, many big questions remain to be answered.

“The very fact that the name is similar to another retirement planning program – the IRA – may indicate that it is, indeed, redundant, and may ultimately fail to gain adoption for that and a host of other reasons,” stated Ric Edelman, founder of the RIA Edelman Financial, to OnWallSteet.com reporter Ann Marsh on Wednesday, January 29.

The MyRA program is mainly aimed at Americans making less than $191,000 a year who do not have access to 401(k) plans. The government plan would automatically draw specified sums of money out of workers’ paychecks, an integral feature of 401(k) plans.

The value of MyRA accounts would compound at low rates, probably slightly more than 3% at most or, at the low end, a bit more than 1%.  But, they would never lose their value thanks to their government backing. And account holders could withdraw their funds at any time, without incurring a tax penalty, a feature unavailable in both 401(k) and IRA plans. Once the accounts reach $15,000 in value, they must be rolled into IRAs.

“The program will be of zero use to planners whose clients – by virtue of the fact that they can afford to hire an advisor in the first place – won’t need it,” Edelman thinks. “Why do we need yet another program creating yet another level of complexity to the system?” Edelman asks. Not all agree with him.