A Roth IRA is funded with after tax dollars, not pretax.
that explains it
so back to my original plan- that I would never put money into a government IRA (Roth or Otherwise) why tell them how much money I have and give them ANY control or regulation over it?
The only benefit I see is tax-free withdrawal if you make a great investment with your Roth IRA.
1. A regular IRA is funded with before tax dollars (you get to deduct the contribution amount from your gross income). You invest it however you want. When you withdraw it, you are taxed on whatever you withdraw (principal or interest) at your then ordinary income tax rate.
2. A Roth IRA is funded with after tax dollars (the amount of the contribution is included in your taxable income with no deduction). You invest it however you want. When you withdraw it, you pay no income taxes on whatever you withdraw.
3. Obama's MyRA is basically a Roth, but you can only invest your money in the Government Securities Investment Fund, which has an average rate of return of less than the inflation rate (e.g., in 2012 the G Fund had a return of 1.47% vs. an inflation rate of 2.08%). Basically, you get a slightly better return than stuffing dollars in your mattress, but not much.
Since the Roth IRAs were first established, I have always assumed that they would become too big of a piggy bank for the government to leave untouched. I have pretty much stuck to regular IRAs on the assumption that getting tax deductions for the contributions in the years that they were made were worth more that the promise (likely to be broken) of no taxes at retirement.
IMHO, Obama's "MyRA" is simply the first step towards government confiscation of private retirement funds, just like Obamacare was simply the first step towards fully socialized medicine.