FinancialForce.com Receives $50 Million in Funding from Advent International to extend it's Mid Market ERP Footprint

FinancialForce.com, a leading cloud ERP provider on the Salesforce1 Platform, announced today that funds managed by Advent International, one of the largest and most experienced global investment groups dedicated solely to private equity, have committed an additional $50 million for the growth of FinancialForce.com as part of a broader investment in FinancialForce.com’s majority investor, UNIT4. After this additional funding, UNIT4 will continue to be the majority shareholder and salesforce.com will continue to be a significant minority investor in the company. 

With this funding, FinancialForce.com will further transform the ERP industry by expanding its cloud-based offering. 

“We are changing the way people think about ERP by making it more customer-centric and social with the cloud as the underpinning,” said Jeremy Roche, President and CEO at FinancialForce.com. “With UNIT4 and Advent’s contribution, FinancialForce.com can expand its ERP solution on the fastest growing platform in cloud computing, Salesforce1. The company is on track to transform the ERP market in the same way that salesforce.com has for CRM.” 

The funds will also enable the company to accelerate investments in all facets of the business including product development, sales, marketing and customer support. 

“To be successful in today’s market, companies must transform into customer-centric organizations. FinancialForce.com’s ERP offering provides end-users with a family of cloud solutions that allow them to gain a unified, informed view of the customer experience across the entire organization,” said Fred Wakeman, Managing Partner and Head of Advent’s Technology, Media and Telecom team. “The company’s unique customer proposition differentiates it, making the business an exciting investment opportunity for UNIT4 and Advent. Together we are focused on maximizing FinancialForce.com’s potential and positioning it for long-term growth.” 

Forrester Research has written extensively on the importance of being customer-obsessed, stating in a recent report: “This is the age of the customer. We have begun a 20-year business cycle in which the most successful enterprises will reinvent themselves to systematically understand and serve increasingly powerful customers.” 

This announcement follows a year of rapid growth for FinancialForce.com. In addition to growing its revenue run rate by 80 percent year-on-year in 2013, the company also launched FinancialForce HCM with its acquisition of Vana Workforce, a global human capital software provider, and created FinancialForce SCM with its purchase of Less Software, a supply chain management software provider. Both products are included in FinancialForce ERP and built on the Salesforce1 Platform.

About FinancialForce.com

FinancialForce.com delivers ERP at Customer Speed™. Built on the Salesforce1 Platform, FinancialForce ERP equips customer-centric businesses with a unified cloud platform and all the applications necessary to grow both the top and bottom line. Our Financial Management, Human Capital Management (HCM), Professional Services Automation (PSA), and Supply Chain Management (SCM) apps allow businesses to increase the speed in which they operate and be more responsive along every touch point of a customer’s journey. Founded in 2009 and headquartered in San Francisco, FinancialForce.com is backed by UNIT4 and salesforce.com.

To learn more please follow us on Twitter @FinancialForce, visit our Facebook page or visit: www.financialforce.com. 

Salesforce, Salesforce1 and others are among the trademarks of salesforce.com.

About UNIT4

UNIT4 is a global cloud-focused business software and services company aimed at helping dynamic public sector and commercial services organizations to embrace change simply, quickly and cost effectively. The Group incorporates a number of the world’s leading change embracing software brands including UNIT4 Agresso, our flagship ERP suite for mid-sized and large services intensive organizations; UNIT4 Coda Financials, our best-of-class financial management software; and FinancialForce.com, the cloud applications company formed with investment from salesforce.com.

About Advent International

Founded in 1984, Advent International is one of the largest and most experienced global investors dedicated solely to private equity. Since inception, the firm has invested in more than 280 buyout transactions in 39 countries and today has $32.2 billion in assets under management. With offices on four continents, Advent has established a globally integrated team of over 170 investment professionals across North America, Europe, Latin America and Asia. The firm focuses on growth and traditional buyout and strategic repositioning transactions across five core sectors, including business and financial services; healthcare; industrial; retail, consumer and leisure; and technology, media and telecoms. After 30 years dedicated to international investing, Advent remains committed to partnering with management teams to deliver sustained revenue and earnings growth for portfolio companies.

 For more information, visit www.adventinternational.com.

Top 5 QuickBooks Online Resources QuickBooks Online Training, Guides, and Other Resources

Glenn Tyndall for About.com writes: Are you looking for resources to help you learn how to use QuickBooks Online? You will find a few excellent resources for the QuickBooks Online edition below. These resources will help you get started using QuickBooks Online, as well as perform more advanced tasks or find answers to other questions that you may have about this accounting software. The list is not a comprehensive list so you will find many additional resources available to you on the web. After reviewing the resources below, you will have answers to most of your QuickBooks questions or have access to training and other materials to get those questions answered. But you can always supplement these aids by other resources that are available to you.

1. QuickBooks Online: Getting Started by Intuit – This guide will help you get started using QuickBooks Online, connect to your bank accounts, create and customize invoices, track your expenses, and perform other basic tasks. This guide was created by Intuit, the company than developed QuickBooks, so it is easy-to-use and accurate since it was made by the developer of the accounting software.
2. QuickBooks Online Support from QuickBooks Online Community. The QuickBooks Online Community is an online question and answer forum, where user-generated questions are answered by other individuals within the community. You can search for answers to many QuickBooks questions, such as “Can I create a report showing the number of shipments for the month without it breaking down the shipping charges?” to “Does QuickBooks Online support multiple currencies and job costing?” Although this forum is not exclusively for QuickBooks Online questions, it contains answers to many QuickBooks Online problems that you may encounter.
3. Mastering QuickBooks Online #1 from QuickBooks Guru. The QuickBooks Guru offers training and tutorials online via Youtube.com. These tutorials are useful for individuals who are visual and auditory learns who prefer a more interactive approach to learning how to use QuickBooks. You can also subscribe to the QuickBooks Guru’s Youtube channel to get access to more QuickBooks Online tutorials if you find this one useful.
4. QuickBooks Simple Start for Dummies.  The popular Dummies.com tutorial series has an online tutorial for getting started with QuickBooks. Like other editions in the dummies series, it is written for the layperson, with practical examples, pictures, and useful practical examples so you will be able to pick up the concepts quickly.
5. QuickBooks Online Tutorials from the Intuit Academy.  The Intuit Academy is where you can find featured training and tutorials on how to use QuickBooks. You can search courses by QuickBooks product to find the resources available specifically for the QuickBooks Online edition.  You will have access to live training, resource materials, and other on-demand training with a subscription to the Intuit Academy.

As mentioned, the above resources are designed to get you started using QuickBooks, get some of your questions answered, and point you in the right direction for additional training and resources. Intuit is always upgrading Intuit and adding new features to the software.  Therefore, resources such as the Intuit Academy that offer continuous training to you are important if you want to stay on top of the QuickBooks Online’s newest features and maximize your productivity and efficiency when using this accounting software. Although this list is designed to get you to resources that can answer a variety of questions you have for the QuickBooks Online edition, you may find other resources on the web that are available to you as well. So if you cannot find an answer here, you should be sure to conduct your own search to help you answer specific questions that remain. 

Australia's BoxFreeIT / Who Should Own your Accounting File? Xero’s Position Hard to Defend / Ransom or Fair Game? Pay Dispute Questions Holding of Client Files

Sholto MacPherson for BoxFreeIT writes:Oscar de Vries gave me a call over a week ago to put his side of the story about a wrangle with a well-known Xero accounting firm on Sydney’s north shore. Oscar claimed he had been billed for $16,000 (reported this week in the SMH as $20,000) for bookkeeping, file conversion and inventory set-up – a fee he felt was unexpectedly high and he didn’t want to pay all of it.

It was difficult to tell how much of this story was just about a pay dispute. BoxFreeIT is about the revolution in cloud technology and the impact this has on the accounting profession. Fights over bills? Not so much.

Oscar’s main beef was that Xero wasn’t giving him control of his accounting file so he could move to another accountant. The accountant didn’t want to let go of the file because he wanted to be paid for the work he had done, although Oscar could still access it.

This wasn’t the first time I had heard a complaint about ownership of the company file. Xero is obviously feeling the pain of negative publicity and is moving swiftly to stem the damage. It has contacted industry figures about the Herald article and Australian managing director Chris Riddhas just posted a 600-word defence on the Xero blog.

Xero’s position is that it is legally bound by its terms and conditions not to mess with the ownership of the company file. If an accountant has opened a subscription on behalf of a client, and the accountant doesn’t want to surrender control of the file, that’s the client’s problem, not Xero’s.

Quite a few comments are going the other way. “Xero should grant severance rights to their client in the event of a request directly from the company. Xero’s company data should not be used as leverage in a dispute. Period,” wrote Mike Porter.

“I dont think your response and current practice is acceptable,” wrote @CJ_NZ.

“As a small business owner, I find the prospect of my accounting firm holding my data file, or subscription login, hostage over a pay dispute, shocking and concerning,” wrote DM in our coverage earlier today.

Investigations by BoxFreeIT show that Xero is on a limb here. Reckon and Intuit both insist that the data in cloud accounting software is owned by the business itself. Even though an Intuit partner sometimes pays Intuit for that subscription (often when they are heavily discounted) the client can call Intuit and transfer the subscription to another Intuit partner.

Reckon simply doesn’t allow its partners to have a billing relationship or file ownership. The business is the owner and the biller. MYOB does allow partners to own the subscription. It’s not clear how it resolves disputes with the business owner – I’ll update later.

It is increasingly clear that Xero is far more aggressive at promoting the ownership of company files by its partners. Its whole partner program is based on the number of subscriptions held by the partner.

This is surely setting up Xero for many fights to come. Eventually it will change its terms and conditions so that business owners retain control of the company file.

It’s just a matter of good business.

Visit BoxFreeIT to comment 

(but some entertaining ones are below)

5 Responses to “Who Should Own your Accounting File? Xero’s Position Hard to Defend”

1. Rod Drury says:

   April 24, 2014 at 7:18 pm

   Great headline. Earning your money there Sholto 

   However in reality this is a very rare issue (only a handful in 280,000+ customers) as accountants by and large act ethically and with a long term view so we really don’t see many disputes. If we cannot assist resolve them ourselves (we take external advice when necessary) we refer the parties to existing dispute resolution processes.

   We’re getting useful feedback on our blog http://www.xero.com/blog/2014/04/managing-xero-subscription/

   We are having a useful discussion with the Professional bodies in NZ/AU and if we have it wrong or if we find should do things better we’re more than happy to change our approach. We’ll always try to do the best thing for our customers and partners.

   While this is an edge case it’s a useful discussion and at the end of the process I’m sure we’ll all have learned something.

   Rod
   CEO – Xero

   Reply
2. Timothy Mumro says:

   April 24, 2014 at 7:23 pm

   Sorry Sholto, I disagree with you. Any accountant can exercise a right of lien over certain documents they hold that may belong to the client. Fee disputes are nothing to do with Xero.

   From the story it appears that the client always had uninterrupted access to and use of Xero during this time. So the accountant didn’t restrict anything. The client was not inconvenienced in any way.

   The accountant merely exercised their right of lien. A legal right that accountants have used for years.

   Hmmmm… Disputes will always happen. Avoid this with a very clear Fee Proposal and the accountant should request up front payment before work starts. Problem solved!

   Reply
• 
  

  More Comments are at BoxFreeIT

3. Ransom or Fair Game? Pay Dispute Questions Holding of Client Files - Aimey Chen for BoxFreeIT writes: 

A highly publicised pay dispute between a men’s shaving supplies company and a Sydney accounting firm has raised questions about the practice of accountants and bookkeepers owning cloud accounting files on behalf of clients.

Oscar de Vries claimed an accounting firm had unfairly charged him $20,000 to move his MYOB file to Xero, set up cloud-based inventory program Unleashed, on-charge subscriptions for both programs and carry out associated bookkeeping over several months at $100 per hour.

The firm allegedly refused to allow de Vries to transfer ownership of the Xero file to himself or another accounting firm until the dispute was resolved, although de Vries could continue to use the Xero file as usual.

“I’m effectively being held to ransom and they refuse to transfer the subscription into my name, so I’m stuck with bills I never signed up for. This could amount to restraint of trade, but I’ve so far been unable to get the issue resolved,” de Vries told the Sydney Morning Herald.

De Vries asked Xero to transfer the ownership to his company but Xero said it would only do so if it received a letter from the owner of the file.

“Xero’s not able to make a ruling either way which party is correct. We’re very clear about the terms of use. If clients are not comfortable with their adviser being the owner, they do have the flexibility to change over by emailing customer care billing team and have a written letter from the owner of the subscription,” Chris Ridd, managing director of Xero Australia told BoxFreeIT.

A New Spin on an Old Game

The practice of holding back a client file in return for payment was not a new phenomenon brought about by cloud accounting software.

It was “very common” for accounting firms to hold MYOB data files until the bill was paid, a bookkeeper told BoxFreeIT, speaking on condition of anonymity. “Keeping the file back has always happened. If the owner doesn’t want to pay for the file then the accountant won’t hand over the MYOB file because the work is in the file,” the bookkeeper said.

However, business owners benefited immediately from work an accountant had performed on their cloud accounting program because they worked from and had access to the same company file. Accountants were instead using the ownership of the file as a bargaining chip rather than access to it, but this had nothing to do with the vendor, the bookkeeper added.

“When that happened (with desktop software) you didn’t go to MYOB and say, Can you make your partner give back the file? You can’t go back to Harvey Norman. But now you can go to a cloud software provider and ask them (for ownership),” the bookkeeper said.

Accounting software companies often encouraged their accounting partners to sell cloud software subscriptions as part of their accounting services. Xero in particular advised partners to include the cost of the subscription in their fees and market it as a bundled service. A company signing up to Xero might not know how much the software cost as part of the service.

The legality of ownership was often not explained to companies buying Xero subscriptions through partners, a bookkeeper claimed. “Companies are signing up and not knowing how much they’re paying for the file or who owns the file.”

Xero’s partner program gave accountants and bookkeepers larger rebates and free practice management software based on the number of Xero subscriptions the partner held.

BoxFreeIT asked MYOB, Intuit and Reckon whether they encouraged partners to hold subscriptions.

MYOB said that either party could hold the subscription, but it was preferable for the business owner to do so. “While it is possible for an accountant to register the account in their name, MYOB recommends the accountant and the client set up the account in the client’s name and (for the client to invite) the accountant and/or bookkeeper as an administrator of the account,” wrote James Scollay, MYOB’s general manager of the business division, in an email to BoxFreeIT.

MYOB’s partners received commissions on registered sales and upgrades but were not incentivised on the number of subscriptions they held.

An Intuit spokesperson said the partner or business owner could hold the billing relationship but that the business owner could change the subscription at any time by calling Intuit. If the business owner had been sold a subsidised subscription by the original partner, the subscription had to be transferred to another Intuit partner.

Reckon also required a business to be the sole owner of the data file. “The small business owner has a direct relationship with Reckon and owns their data files,” said a Reckon spokesperson.

Best Practice in the Cloud

Accountants contacted by BoxFreeIT weren’t in favour of using file ownership to negotiate pay disputes, and it appeared that the practice was becoming less viable for cloud accounting programs.

“Having files in the cloud does somehow make life a little difficult. We could refuse them access to the Xero file, but if they own the Xero subscription, they could take it and run and then legal action would need to be taken” for unpaid bills, said Margaret Holmes, chartered accountant at New Zealand’s Engine Room. The Engine Room required clients to pay upfront as a result, often on fixed-fee contracts. “If the SMB owner asked for a change in administration of the subscription, then accountants really can’t say no,” Holmes added.

“There’s the legal side and then there’s the pragmatic side. Obviously the move to the cloud has changed and put the power more into the hands of the business owner,” said Rachel White  CFO of Azure Group. “Probably in the future, while legally accountants can withhold information, it’s going to be extraordinarily difficult.”

“Our understanding of the legal position is an adviser can only withhold data that they haven’t been paid for,” said Matthew Addison, executive director of the Institute of Certified Bookkeepers and an accountant. “Professionally and ethically neither accountants or bookkeepers should hold a data file from the business and pay disputes should be dealt with separately.

“It’s not right. It’s the same as withholding business records. If you were withholding paper records, the ethical obligation is to hand it over despite any dispute,” Addison added.

How to Avoid a Fee Dispute

A signed letter of engagement outlining the specific fees can avoid pay disputes, said a spokesperson from Crowe Horwath, a Xero Gold Partner. The cloud sphere gave the business owner more power and accountants would find it more difficult to legally withhold information to solve a pay dispute.

“A conversion should not be costing anywhere near the report. In this case, the issue is the delivery of professional services rather than ownership of subscription. It’s a dispute of engagement and has nothing to do with Xero,” said Chris Ridd, managing director of Xero Australia.

“To avoid these situations, having a clear term of engagement is very important.”

A fixed fee payment scheme was less likely to run into pay disputes because clients were quoted specifically before work started. A five to 10 minute conversation could spark an invoice two weeks later, but a fixed fee price payment usually included unlimited phone calls.

“We avoid fee disputes by having a fixed fee or by agreeing the fee before we start work, so it’s never a surprise to the client and we get them to pay before the work starts with a choice of payment terms,” said Holmes. “They can argue before the work starts so then fees can be reduced for clients to find other methods of service.”

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THE CAPITAL GAINS LOOK-THROUGH RULE AT A GLANCE

Dale F Jensen for Tax Insights / HHCPA writes: Taxpayers love utilizing the lower capital gains tax rates when they can. Not widely known, however, is the Capital Gains Look-Through Rule (IRS Reg 1.1(h)-1). This rule says that certain types of gain from the sale or exchange of an interest in a partnership (including an LLC taxed as a partnership), stock in an S-corporation, or an interest in a trust are taxed as if the sale of all the assets in the pass-through entity had occurred.

Because different types of assets are deemed to be sold in these entities, various tax rates may apply. For example, a selling partner (including a member in an LLC treated as a partnership) may be subject to a 25% maximum rate from unrecaptured Section 1250 gain (generally dealing with depreciation recapture), or they could get hit with a 28% maximum rate on the sale of collectables. Another example is when the entity has what IRS terms “Hot Assets” which are generally things like unrealized receivables or inventory which generate ordinary (not capital gain) income.

Or, say you’re a shareholder selling S-corporation stock or a beneficiary selling an interest in a trust. Along with the items mentioned above, another example is if the entity has capital assets held short term, ordinary income rates can then apply.

It is important to note that while the taxpayer needs to determine the type of asset, its fair market value, its tax basis, and its holding period, the regulation does not require or provide pass-through entities with any specific reporting rules to follow. It is also important to note that the capital gains look-through rule does not apply to liquidations or redemptions.

Introducing acclux accounting: The New Cloud Accounting and Project Management System

Today, MTS Development LLC, a leading provider for enterprise application software and services released acclux accounting; the online accounting and project management sass solution for small businesses and entrepreneurs. acclux accounting was built from the ground up with a clean slate for the cloud and features an elegant interface that redefined the accounting and project management experience on the cloud. acclux accounting comes with a complete integration with PayPal to fully automate the invoice to payment process, this along with a complete accounting and project management cycle, making it a complete and comprehensive solution for small businesses and entrepreneurs.

“Small businesses and entrepreneurs recognize the need for a fresh option in the marketplace, one that’s built for the cloud as opposed to something that is simply ported over. In addition, it’s no secret that cross-platform and anywhere access are one of the top requirements today,” said Mustafa Al-Shaikhly a A CEO at MTS Development LLC.

acclux accounting features:

Fast and user friendly interface
- All in one system: acclux accounting is a powerful tool with a diverse functionality. acclux accounting is simple, yet complete accounting and project management solution. It has been designed specifically to meet the need of small yet growing business.
- Cloud Solution: acclux accounting is a cloud solution that enables business owners to manage their business from any device and anywhere on this planet. acclux accounting also allows multi users to access the system at one time.
- It is always up-to-date: No installation hassle acclux accounting is always up-to-date; small business owners will enjoy updates at no extra fees.

Elegant Dashboard with single peek to a magnified view
- acclux accounting is the only online accounting system that offers live dashboard that brings a complete view of your business on one screen.
- acclux accounting gives small business owners a glance of their financial and makes the ability to track expenses and incomes easier than ever expected. acclux accounting dashboard breaks down expenses into different categories to help small business owners and entrepreneurs to keep their eyes open on their expenses.
- acclux accounting dashboard offers a real-time wide window for projects/tasks. It helps business owners to stay updated with their projects/tasks statuses, see how many outstanding projects/or tasks they are currently working on. acclux accounting dashboard lists and prioritizes projects and gives small business owners a sense of which project is running late.

Projects and Tasks
- acclux accounting help small business owners to add the team spirit by allowing multiple users with different privileges to access the system at one time.
- acclux accounting allows project managers to create unlimited number of projects
- acclux accounting gives the ability to define unlimited tasks for each of these projects.
- acclux accounting helps project managers to organize the work of their team members. With acclux accounting, project managers can assign tasks to different users and keep track of where those tasks are.
- With the project dashboard, everything is in detail, project managers and owners can track project, its tasks and whether or not they are on time.

Contacts
- acclux accounting helps small business owners to stay organized by keeping their contacts organized in a professional way. Since acclux accounting is an online accounting system, contacts can be securely accessed from any device, and from anywhere on this planet.

Invoices
- acclux accounting helps small business owners create professional invoices,
- acclux accounting helps small business owners to view/print and email their invoices.
- Invoices can be paid online or manually.
- acclux accounting has a built-in PayPal integration. This gives customers the ability to pay with their own credits or via their own PayPal accounts.

Financial – acclux accounting is your accountant
- acclux accounting offers a complete yet simple-to-use online accounting system. acclux accounting is your accountant.
- acclux accounting helps you stay in control of the flow of your money. It helps you to record your expenses, or incomes and to transfer your money from one account to another.

Reports – acclux accounting reports help small business owners to stay informed
- acclux accounting offer the reports that small business owners need the most.
- acclux accounting not only offers a beautiful print out of your reports, but acclux accounting is also environmental friendly and can also help you to generate an electronic version of these reports as PDF or excel files.

Setting – Feel the control
- With multiple users capability administrators need to be in control that’s why acclux accounting designed to give the administrators the control they need to help their business grow faster.

Pricing and availability
acclux accounting is  available now as sass with a monthly subscription, and with no cancelation fees and/or long term contract. The price for the standard edition is $25, for more information or to create a trial account visit www.acclux.com

Sign up for acclux accounting for free Sign up (No credit card is required)

Location: Los Angeles, CA, USA

9 Things to Know About the myRA

Rob Berger for The DoughRoller writes: In the most recent State of the Union Address, President Obama unveiled themyRA – My Retirement Account. Another retirement savings option? Yes. In addition to 401k, 403b, IRA, Roth IRA and a host of other types of retirement accounts, later this year we can add the myRA to the list.

In this article we’ll cover what you need to know about a myRA and whether it’s a good option.

Spoiler Alert: I believe myRAs aren’t right for most people. While they do have some advantages, the disadvantages for outweigh them.

1. It’s a workplace savings account with a twist

You contribute to a myRA through deductions from your paycheck. Similar to a 401(k), myRAs offer the convenience of employer deductions from your paycheck in amounts you determine.

The myRA option is available only to those employed. Unlike a 401(k), however, employers do not administer myRA accounts. Your employer is simply the vehicle to funnel your contributions from your paycheck to the myRA account.

2. You qualify based on income

Qualifying for a myRA is similar to qualifying for a Roth IRA. There are income limits. In 2014 if you’re single and make less than $129,000 or married filing jointly making less than $191,000 a year, you can open and contribute to a myRA. If you make more, you cannot open a myRA.

Also similarly to Roth IRAs, the myRA has contribution limits. The annual limit is $5,500, plus an extra $1,000 for people age 50 and over.

A myRA is capped at a total contribution of $15,000. Once it reaches that amount, it needs to be rolled into a Roth IRA. A myRA can only be open for 30 years. So even if you haven’t hit the $15,000 limit, you’ll have to roll your money into a Roth IRA after 30 years. (Hopefully it won’t take you that long to amass $15,000.)

3. You have no investment choices

Another way that the myRA differs from a traditional or Roth IRA is that you don’t have any investment choices. All the money gets invested in the G Fund – Government Securities Investment Fund. Government employees who use a Thrift Savings Plan will be familiar with this fund, as the G Fund is available in a TSP.

Unlike a regular IRA you might open through Vanguard, for instance, you don’t get to pick and choose where you invest your money. And you cannot invest in stocks, mutual funds, ETFs, or even other types of bond funds.

This is the biggest drawback to the myRA. This is why I’m not a big fan of it for most people. This is especially true because the G Fund hasn’t had great returns. In 2012, it only returned 1.47%, and for 2013, it was only 1.89%. From 2003 to 2012, it averaged a 3.61% annual return, slightly above the average inflation rate of 2.5%.

4. Total contribution limits are like IRAs

As with IRAs, your total contribution to a myRA counts towards your contribution limit for all IRAs. If you put $5,500 in a Roth IRA, you can’t put anything into a myRA, even if you qualify for one. Likewise, if you contribute $5,500 to a myRA, you can’t put anything into a Roth or traditional IRA.

You can always contribute a little to each type of account, but your total limit is still $5,500 (with the additional $1,000 for people age 50 and over).

5. It’s a good first step

I suspect most people listening to the podcast or reading this article would prefer opening an IRA – whether at Vanguard or Betterment or Motif Investing or at a broker. And they’ll probably invest in a Target Date Retirement Fund or a diversified portfolio of mutual funds.

Some folks, however, might not be ready to do that. Some may find the thought of investing through an IRA intimidating. And the idea of the myRA is to make retirement investing as simple as possible, just to get people started investing for retirement.

This isn’t a comprehensive retirement solution, and I don’t think it’s intended as such. It’s just a first step. And if a myRA account helps you or someone you know take that first step, it’s served its purpose.

6. The minimum to open is only $25

The minimum to open a myRA is only $25, so that throws all excuses out the window. And the account has only a $5 minimum contribution per paycheck. The cost of a Starbucks mocha latte will get you a retirement account, even if that’s all your can afford.

As you invest more over time, you’ll eventually outgrow the myRA and will need to switch to a Roth IRA. But the low startup costs are one of the things that make it a decent first step, if that’s all you can afford.

7. Principal is guaranteed (as is a lackluster return)

This is less a function of the myRA itself and more a function of the investment vehicle – the Government Securities Investment Fund. This is virtually a no-risk investment.

(Again, the lower risk comes with lower returns, but that’s the trade-off.)

8. No early withdrawal penalties

One other aspect of a myRA to consider is that there are no penalties for early withdrawal. The Roth IRA, for instance, has a 5-year rule, and you can only avoid penalties if you make early withdrawals for certain purposes – like to buy your first home.

But with the myRA there are absolutely no early withdrawal penalties. So this can actually be a decent alternative to a traditional savings account. It won’t replace stock and mutual fund investments, but last year’s 1.89% returns clobbers today’s savings account options. Thebest savings rate right now is .9%.

9. Tax-free withdrawals, sort of

This is a confusing aspect of the myRA. According to TreasuryDirect.gov, you can withdraw your contributions tax-free at any time, but your earnings will be taxed if you withdraw them before age 59 1/2. Here’s what TreasuryDirect states: “Your contributions can be withdrawn tax free at anytime; earnings generally can be withdrawn tax free after age 59½.”

So if you do use a myRA as a savings account alternative, you may get into a situation where you’d want to withdraw just your contributions. You can always leave the earnings in the account and later roll them into a Roth IRA.

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