US. Would Universal Savings Accounts cannibalize retirement plan contributions?
In the coming days, Rep. Kevin Brady, R-TX, chair of the House Ways and Means Committee, is expected to circulate a discussion draft of a Tax Reform 2.0 bill with an eye to advancing a floor vote in the House this September.
The bill is expected to include a provision creating Universal Savings Accounts, which would allow any American age 18 or older to invest after-tax dollars that could grow tax-free and be withdrawn for any purpose, at any time, without penalties.
Details of the proposal are scant, but previous companion legislation, last introduced in 2017 by Sen. Jeff Flake, R-AZ, and Rep. Dave Brat, R-VA, set the contribution limit at $5,500 annually, which would be adjusted for inflation.
The Universal Savings Account Act would serve as a “supercharged IRA,” said Rep. Brat in a statement when he first introduced the bill in 2015.
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