The U.S. Treasury Department is introducing a new retirement plan option for businesses. With just a $25.00 down payment, workers can now invest in a low-cost retirement plan through their employers.
The plan sounds simple enough. The Treasury workers with employers to recruit investors into its plan. The fund is managed by the Treasury and all employees have to do is contribute $5.00 a month from their paychecks after the initial installment. There are no fees, but neither the employer nor the Treasury will match any contrubtions. The funds will be held in a secure deposit by the Treasury Department and are therefore backed by it.
It's a good way to encourage workers to save for their retirement, but at $5.00 a month, it will take sometime before any substantial savings are realized, unless that money is invested in high growth funds. After reaching a certain threshold, owners can either withdraw their money or roll it over to another plan. Call me skeptic, but this little arrangement sounds like it's meant to benefit the Treasury more than it does investors.