Universal Savings Account Act of 2025

Key Points

• The bill creates a new type of tax-free savings account called a Universal Savings Account. Money earned inside the account from interest or investments would not count as taxable income, similar to a Roth IRA but without restrictions on what you can use the money for.
• You could contribute up to $10,000 in the first year. The limit rises by $500 each additional year and is also adjusted for inflation, but it can never exceed $25,000 per year (also adjusted for inflation).
• Unlike retirement accounts such as 401(k)s and traditional IRAs, you can withdraw money from a Universal Savings Account at any time without paying taxes or penalties. This flexibility makes the account useful for any savings goal, not just retirement.
• If an account holder passes away, a surviving spouse can take over the account and keep all the tax benefits. For any other heir, the account balance is treated as distributed on the date of death and the account closes.
• There is a 6% excise tax on excess contributions (amounts over the annual limit), but account holders can avoid the penalty by withdrawing the excess plus any earnings it generated before their tax filing deadline.

Votes

No votes have been recorded for this legislation yet.