Senator Ted Cruz and Representative Diana Harshbarger are set to introduce the Universal Savings Account Act. The proposed accounts are designed to offer flexibility similar to a Roth IRA, but without restrictions on withdrawals or age limits.
The notable feature of these accounts is tax-free growth, although contributions will be taxed. Unlike traditional retirement accounts, the funds can be used for a broad range of purposes. Harshbarger commented, “The Universal Savings Account Act cuts through red tape and gives every American a flexible, tax-free way to save, invest and spend — without government interference or penalties.”
The bill allows an initial contribution limit of $10,000 a year for individuals and $20,000 for married couples who are U.S. citizens or permanent residents. This limit would increase by $500 annually until reaching $25,000, after which it would adjust with inflation.
Harshbarger stated, “Washington shouldn’t be in the business of micromanaging how people use their own money. This bill is a win for working families, a win for personal freedom and a win for financial independence.”
This legislation follows several similar attempts in the past. The bill comes amid ongoing discussions about tax policy at the national level. Cruz added, “A simple and accessible incentive savings plan will provide families with a way to establish financial security and prosperity. This bill provides a straightforward solution to those challenges. I strongly urge my colleagues to pass this bill for the future generations of Americans.”
The accounts would have no income restrictions for holders and could be set up for minors, with provisions for transfer to immediate family upon the holder’s passing. Countries like the United Kingdom and Canada already have similar universal savings accounts, as noted by the Tax Foundation.
