Universal Savings Account Act of 2024

Subchapter F of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new part:

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).

For purposes of this section, the term universal savings account means a trust created or organized in the United States by an individual for the exclusive benefit of such individual and which is designated (in such manner as the Secretary may 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 taxable year in excess of the contribution limit specified in subsection (c)(2).

(2) No distribution will be made unless it is—

(A) cash, or

(B) property that—

(i) has a readily ascertainable fair market value, and

(ii) is identified by the Secretary in regulations or other guidance as property to which this subparagraph applies.

(3) 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.

(4) No part of the trust assets will be invested in life insurance contracts or collectibles (as defined in section 408(m)).

(5) The interest of an individual in the balance of his account is nonforfeitable.

(6) The assets of the trust shall not be commingled with other property except in a common trust fund or common investment fund.

Except as provided in subparagraph (B), any distribution from a universal savings account shall not be includible in gross income.

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.

The aggregate amount of contributions (other than qualified rollover contributions described in subsection (d)) for any taxable year to all universal savings accounts maintained for the benefit of an individual shall not exceed the lesser of—

(i) $10,000, or

(ii) an amount equal to the compensation (within the meaning of section 219) includible in such individual’s gross income for such taxable year.

The amount allowable as a contribution under subparagraph (A)(i) (determined without regard to this subparagraph) shall be reduced by $50 for each $1,000 (or fraction thereof) by which the taxpayer’s modified adjusted gross income exceeds the applicable threshold amount.

For purposes of this subparagraph, the term applicable threshold amount means —

(I) $400,000, in the case of a joint return or surviving spouse,

(II) $300,000 in the case of a head of household, or

(III) $200,000 in the case of any other return.

For purposes of this subparagraph, the term modified adjusted gross income means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933.

In the case of an individual who is a dependent of another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable year begins, the dollar amount under subparagraph (A) for such individual’s taxable year shall be zero.

In the case of any taxable year beginning in a calendar year after 2025, the dollar amounts in subparagraphs (A)(i) and (B)(ii) 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 amount after adjustment under the preceding sentence is not a multiple of $100, such amount shall be rounded to the next lower multiple of $100.

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 individual, but only if such amount is contributed not later than the 60th day after the distribution from such other account.

Upon death of any account holder of a universal savings account—

In the case of the account holder’s surviving spouse or child 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 acquiring spouse or child were the account holder.

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.

This section shall be applied without regard to any community property laws.

Rules similar to the rules of paragraphs (2) and (4) of section 408(e) shall apply to any universal savings account.

The trustee of a universal savings account shall make such reports regarding such account to the Secretary and to the account holder with respect to contributions, distributions, and such other matters as the Secretary may require. Such reports shall be—

(1) filed at such time and in such manner as the Secretary provides, and

(2) furnished to account holders—

(A) not later than January 31 of the calendar year following the calendar year to which such reports relate, and

(B) in such manner as the Secretary provides.

Section 4973(a) of such Code 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),

Section 4973 of such Code is amended by adding at the end the following new subsection:

For purposes of this section—

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.

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.

Section 4975(e)(1) of such Code 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 530U).

Section 6693(a)(2) of such Code 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 inserting after subparagraph (F) the following new subparagraph:

(G) section 530U(g) (relating to universal savings accounts).

The table of parts for subchapter F of chapter 1 of such Code is amended by adding at the end the following new item:

The amendments made by this section shall apply to taxable years beginning after December 31, 2024.