Universal Savings Accounts. Like Roth IRAs, But With a Twist

Có thể bạn quan tâm

Getting the right tax advice and tips is vital in the complex tax world we live in. The Kiplinger Tax Letter helps you stay right on the money with the latest news and forecasts, with insight from our highly experienced team (Get a free issue of The Kiplinger Tax Letter or subscribe). You can only get the full array of advice by subscribing to the Tax Letter, but we will regularly feature snippets from it online, and here is one of those samples…

Bạn đang xem: Universal Savings Accounts. Like Roth IRAs, But With a Twist

The U.S. federal tax code provides for a number of tax-advantaged savings accounts that allow tax-free distributions only for specific purposes. Think 529 plans for college savings, IRAs for retirement, and health savings accounts for medical needs. Some lawmakers and think tanks in Washington D.C. want to expand on the use of tax-advantaged savings accounts and make them available for broader use.

Universal Savings Accounts (USAs) are quickly becoming a popular savings account proposed option. Conservative think tanks, Republican lawmakers and the authors of Project 2025 are promoting this idea, and they will likely have the ears of officials in Donald Trump’s administration.

Subscribe to Kiplinger’s Personal Finance

Xem thêm : How SECURE 2.0 will give a leg up to part-timers saving for retirement in 2025

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail.

Profit and prosper with the best of expert advice – straight to your e-mail.

Xem thêm : Filipino caregivers in Korea struggle with high costs, low savings

USAs are tax-advantaged savings vehicles that are similar to Roth IRAs, with a twist. USAs let owners withdraw the funds at any time for any purpose. Like Roths, owners of USAs would get no up-front income tax benefit on contributions to USAs, and distributions would be nontaxable. However, unlike Roths, tax-free/penalty-free distributions could be withdrawn from USAs at any time for any purpose. Proponents of USAs cite their simplicity.

Let’s look at two USA proposals. The first is from Project 2025, the policy blueprint which was designed for the next Republican administration and spearheaded by the Heritage Foundation. Project 2025’s proposal would let people put up to $15,000 of post-tax earnings into USAs, with tax-free earnings and unrestricted tax-free withdrawals at any time. We don’t know for certain if the $15,000 limit is lifetime or per year, although it’s probably an annual cap.

The second proposal was introduced in the House by Republican Representative Diana Harshbarger (R-TN) and several other GOPers. The Universal Savings Account Act of 2024 would allow U.S. citizens and residents who are 18 years or older to contribute up to $10,000 a year to a USA. The annual contribution would be capped at $20,000 for married couples filing a joint federal tax return. These figures would be indexed annually to account for inflation. The earnings in the account would grow tax-free, and account holders could take tax-free withdrawals at any time for any purpose. Upper-income individuals would not be eligible for USAs. According to a one-page fact sheet on the bill, “eligibility would begin to phase-out for individuals with modified adjusted gross income (MAGI) of $200,000 per year ($400,000 for married couples filing jointly), indexed annually.”

The concept of USAs or a similar broad tax-advantaged savings account option already exists in some other countries. For example, Canada has tax-free savings accounts, with annual post-tax contributions of up to $7,000 and tax-free withdrawals that can be made at any time for any purpose without tax or penalty.

This first appeared in The Kiplinger Tax Letter. It helps you navigate the complex world of tax by keeping you up-to-date on new and pending changes in tax laws, providing tips to lower your business and personal taxes, and forecasting what the White House and Congress might do with taxes. Get a free issue of The Kiplinger Tax Letter or subscribe.

Nguồn: https://poissondistribution.lat
Danh mục: News