H.R. 3186: Universal Savings Account Act of 2025

The Universal Savings Account Act of 2025 aims to create a new type of tax-advantaged savings account called a Universal Savings Account (USA). Here are the main components of the bill:

1. Establishment of Universal Savings Accounts

A Universal Savings Account will be established as a trust for the sole benefit of an individual. These accounts will be exempt from taxes, except for taxes on unrelated business income for charitable organizations.

2. Contributions to Universal Savings Accounts

Contributions to the accounts will have specific rules:

• All contributions must be made in cash.
• There will be an annual contribution limit starting at $10,000, which can increase based on the number of years since 2024, with an upper limit of $25,000.
• Any excess contributions will incur taxes as specified by existing laws.

3. Distributions from Universal Savings Accounts

Generally, distributions from these accounts will not be included in the account holder's gross income, making them tax-free. However, any distribution related to excess contributions will be taxable in the year made.

4. Rollovers

Account holders can transfer funds from one Universal Savings Account to another within a specified time without penalty.

5. Treatment Upon Death

Upon an account holder's death:

• If the surviving spouse inherits the account, it will be treated as their own.
• For others, the account will be considered distributed and cease to be a Universal Savings Account.

6. Reporting Requirements

Trustees of Universal Savings Accounts will be required to submit reports to the Secretary of the Treasury and the account beneficiaries regarding contributions and distributions.

7. Effective Date

The provisions of this act will take effect for taxable years beginning after December 31, 2024.

Relevant Companies

None found.