A proposed new type of savings account would allow Americans to save five figures each year and enjoy tax benefits similar to those of a Roth IRA — minus the restrictions and potential penalties.
Sen. Ted Cruz (R-Texas) and Rep. Diana Harshbarger (R-Tenn.) introduced this proposal, titled the Universal Savings Account Act of 2025, in May.
The Universal Savings Account Act of 2025
For 2025, universal savings accounts (USAs) would have a contribution limit of $10,000 for an individual or $20,000 for a married couple filing a joint tax return.
Each year thereafter, the annual contribution limit would increase by $500, until it reaches $25,000, and be adjusted for inflation.
As with a Roth IRA, you would not receive a tax deduction for contributing to a USA but would not owe federal income taxes on money you withdraw, including earnings.
Also, you would be able to invest the money you put in a USA.
But unlike with an IRA, you would be allowed to withdraw money from USAs penalty-free at any age. (With retirement accounts like IRAs, you generally incur a 10% penalty if you withdraw earnings prior to the age of 59½.)
Also, all U.S. citizens and legal permanent residents aged 18 or older would qualify to contribute to USAs, regardless of how much income they earn. (Traditional and Roth IRAs are subject to income limits.)
Taxpayers also would be allowed to open USA custodial accounts for minors. (This isn’t possible with IRAs unless the child has a job, because a taxpayer or their spouse must earn compensation such as wages, a salary or self-employment income to be eligible to contribute to an IRA.)
What happens next
Universal savings accounts appear to be similar to Canada’s tax-free savings account (TFSA), which also allows money to both grow and be withdrawn tax-free. Like the proposed USA, the TFSA also lets contributors withdraw money at any time for any purpose and at any age.
Before you get too excited about the USA, it’s important to note that the bill hasn’t advanced in the Senate or House yet. So, it has a long road ahead and may or may not eventually make it to President Donald Trump’s desk to be signed into law.
Also, this isn’t the first legislation to propose universal savings accounts. Such bills were introduced in 2024 and in 2017, and neither went anywhere.
On the one hand, that would not appear to bode well for the new bill’s odds of advancement. However, Harshbarger notes that the new bill is based on similar provisions in the Family Savings Act of 2018, which did pass the House that year.
If you have strong feelings about USAs, you can contact your senators and representative to let them know how you feel about the bill.
For now, Roth IRAs and health savings accounts remain the top options for those who want to save money for future goals and never pay taxes on the gains. To learn more about the latter, check out “3 Ways a Health Savings Account Can Improve Your Finances.”
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