[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1581 Introduced in Senate (IS)]
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119th CONGRESS
1st Session
S. 1581
To amend the Internal Revenue Code of 1986 to create Universal Savings
Accounts.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 1, 2025
Mr. Cruz introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to create Universal Savings
Accounts.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Universal Savings Account Act of
2025''.
SEC. 2. UNIVERSAL SAVINGS ACCOUNTS.
(a) In General.--Subchapter F of Chapter 1 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new part:
``PART IX--UNIVERSAL SAVINGS ACCOUNTS
``SEC. 530A. UNIVERSAL SAVINGS ACCOUNTS.
``(a) General Rule.--A Universal Savings Account shall be exempt
from taxation under this subtitle. Notwithstanding the preceding
sentence, such account shall be subject to the taxes imposed by section
511 (relating to imposition of tax on unrelated business income of
charitable organizations).
``(b) Universal Savings Account.--For purposes of this section, the
term `Universal Savings Account' means a trust created or organized in
the United States for the exclusive benefit of an individual and which
is designated (in such manner as the Secretary shall prescribe) at the
time of the establishment of the trust as a Universal Savings Account,
but only if the written governing instrument creating the trust meets
the following requirements:
``(1) Except in the case of a qualified rollover
contribution described in subsection (d)--
``(A) no contribution will be accepted unless it is
in cash, and
``(B) contributions will not be accepted for the
calendar year in excess of the contribution limit
specified in subsection (c)(1).
``(2) The trustee is a bank (as defined in section 408(n))
or another person who demonstrates to the satisfaction of the
Secretary that the manner in which that person will administer
the trust will be consistent with the requirements of this
section or who has so demonstrated with respect to any
individual retirement plan.
``(3) The interest of an individual in the balance of his
account is nonforfeitable.
``(4) The assets of the trust shall not be commingled with
other property except in a common trust fund or common
investment fund.
``(5) No part of the trust funds will be invested in life
insurance contracts.
``(c) Treatment of Contributions and Distributions.--
``(1) Contribution limit.--
``(A) In general.--The aggregate amount of
contributions (other than qualified rollover
contributions described in subsection (d)) for any
calendar year to all Universal Savings Accounts
maintained for the benefit of an individual shall not
exceed the sum of--
``(i) $10,000, plus
``(ii) the product of--
``(I) $500, and
``(II) the number of calendar years
after 2024 and before such calendar
year, plus
``(iii) in the case of any calendar year
after 2025, the product of--
``(I) the sum of the amount in
clauses (i) and (ii) for such calendar
year, multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for the calendar year,
determined by substituting `calendar
year 2024' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
If any increase under clause (iii) is not a
multiple of $100, such amount shall be rounded
to the next lower multiple of $100.
``(B) Limitation.--
``(i) In general.--The amount determined
under subparagraph (A) for any calendar year
shall not exceed $25,000.
``(ii) Inflation adjustment.--In the case
of any calendar year after 2025, the $25,000
amount under clause (i) shall be increased by
an amount equal to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for the calendar year,
determined by substituting `calendar
year 2024' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
If any increase under this clause is not a
multiple of $100, such amount shall be rounded
to the next lower multiple of $100.
``(2) Distributions.--
``(A) In general.--Except as provided in
subparagraph (B), any distribution from a Universal
Savings Account shall not be includible in gross
income.
``(B) Net income attributable to excess
contributions.--Any distribution of net income
described in section 4973(i)(2) shall be includible in
the gross income of the account holder in the taxable
year in which the contribution to which such net income
relates was made.
``(d) Qualified Rollover Contribution.--For purposes of this
section, the term `qualified rollover contribution' means a
contribution to a Universal Savings Account from another such account
of the same beneficiary, but only if such amount is contributed not
later than the 60th day after the distribution from such other account.
``(e) Treatment of Account Upon Death.--Upon death of any account
holder of a Universal Savings Account--
``(1) Spouse.--In the case of the account holder's
surviving spouse acquiring such account holder's interest in
such account by reason of the death of the account holder, such
account shall be treated as if the spouse were the account
holder.
``(2) Other cases.--In any other case--
``(A) all amounts in such account shall be treated
as distributed on the date of such individual's death,
and
``(B) such account shall cease to be treated as a
Universal Savings Account.
``(f) Custodial Accounts.--For purposes of this section, a
custodial account shall be treated as a trust under this section if the
assets of such account are held by a bank (as defined in section
408(n)) or another person who demonstrates, to the satisfaction of the
Secretary, that the manner in which he will administer the account will
be consistent with the requirements of this section, and if the
custodial account would, except for the fact that it is not a trust,
constitute a trust which meets the requirements of subsection (b). For
purposes of this title, in the case of a custodial account treated as a
trust by reason of the preceding sentence, the custodian of such
account shall be treated as the trustee thereof.
``(g) Reports.--The trustee of a Universal Savings Account shall
make such reports regarding such account to the Secretary and to the
beneficiary of the account with respect to contributions,
distributions, and such other matters as the Secretary may require. The
reports required by this subsection shall be filed at such time and in
such manner and furnished to such individuals at such time and in such
manner as may be required.''.
(b) Tax on Excess Contributions.--
(1) In general.--Section 4973(a) is amended by striking
``or'' at the end of paragraph (5), by inserting ``or'' at the
end of paragraph (6), and by inserting after paragraph (6) the
following new paragraph:
``(7) a Universal Savings Account (as defined in section
530U),''.
(2) Excess contribution.--Section 4973 is amended by adding
at the end the following new subsection:
``(i) Excess contributions to universal
savings accounts.--For purposes of this
section--
``(1) In general.--In the case of Universal Savings
Accounts (within the meaning of section 530U), the term `excess
contributions' means the sum of--
``(A) the amount (if any) by which the amount
contributed for the taxable year to such accounts
(other than qualified rollover contributions (as
defined in section 530U(d))) exceeds the contribution
limit under section 530U(c)(2) for such taxable year,
and
``(B) the amount determined under this subsection
for the preceding taxable year, reduced by the sum of--
``(i) the distributions out of the account
for the taxable year, and
``(ii) the amount (if any) by which the
maximum amount allowable as a contribution
under section 530U(c)(2) for the taxable year
exceeds the amount contributed to the accounts
for the taxable year.
``(2) Special rule.--A contribution shall not be taken into
account under paragraph (1) if such contribution (together with
the amount of net income attributable to such contribution) is
distributed to the account holder on or before the due date of
the account holder's return of tax for such taxable year.''.
(c) Tax on Excess Contributions.--
(1) In general.--Subsection (a) of section 4973 of the
Internal Revenue Code of 1986 is amended by striking ``or'' at
the end of paragraph (5), by inserting ``or'' at the end of
paragraph (6), and by inserting after paragraph (6) the
following new paragraph:
``(7) a Universal Savings Account (as defined in section
530A),''.
(2) Excess contribution.--Section 4973 of such Code is
amended by adding at the end the following new subsection:
``(i) Excess Contributions to Universal Savings Accounts.--For
purposes of this section--
``(1) In general.--In the case of Universal Savings
Accounts (within the meaning of section 530A), the term `excess
contributions' means the sum of--
``(A) the amount (if any) by which the amount
contributed for the taxable year to such accounts
(other than qualified rollover contributions (as
defined in section 530A(d))) exceeds the contribution
limit under section 530A(c)(1) for such taxable year,
and
``(B) the amount determined under this subsection
for the preceding taxable year, reduced by the sum of--
``(i) the distributions out of the account
for the taxable year, and
``(ii) the amount (if any) by which the
maximum amount allowable as a contribution
under section 530A(c)(1) for the taxable year
exceeds the amount contributed to the accounts
for the taxable year.
``(2) Special rule.--A contribution shall not be taken into
account under paragraph (1) if such contribution (together with
the amount of net income attributable to such contribution) is
distributed to the account holder on or before the due date of
the account holder's return of tax for such taxable year.''.
(d) Tax on Prohibited Transactions.--Section 4975(e)(1) of the
Internal Revenue Code of 1986 is amended by striking ``or'' at the end
of subparagraph (F), by striking the period at the end of subparagraph
(G) and inserting ``, or'', and by adding at the end the following new
subparagraph:
``(H) a Universal Savings Account (as defined in
section 530A).''.
(e) Failure to Provide Reports on Universal Savings Accounts.--
Paragraph (2) of section 6693(a) of the Internal Revenue Code of 1986
is amended by striking ``and'' at the end of subparagraph (E), by
striking the period at the end of subparagraph (F) and inserting ``,
and'', and by adding at the end the following new subparagraph:
``(G) section 530A(g) (relating to Universal
Savings Accounts).''.
(f) Conforming Amendment.--The table of parts for subchapter F of
chapter 1 of the Internal Revenue Code of 1986 is amended by adding at
the end the following new item:
``Part IX. Universal Savings Accounts''.
(g) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2024.
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