In the 2025 One Big Beautiful Bill Act, Congress created a new kind of trust called a Trump Account. It is being pitched as a free-market way to give every child a financial head start. In reality, the accounts offer only limited additional tax benefits compared to existing personal savings options and are wrapped in complex rules that will discourage widespread use. Their primary function is not to expand personal savings but to accept government transfers, employer contributions, and other third-party funds.
And Trump Accounts are already producing a second-order effect: they are generating new interest in creating even more special-purpose accounts.
We already have more than a dozen special-purpose savings accounts in the tax code: 401(k)s and IRAs for retirement, 529 plans and Coverdells for education, HSAs and FSAs for health expenses, ABLE accounts for disability, dependent care FSAs, emergency savings, and others. Each comes with its own eligibility rules, contribution limits, income phaseouts, withdrawal restrictions, penalties for improper use, required minimum distributions, paperwork, and compliance traps.
Trump Accounts added another layer to this maze. That added complexity is not accidental; it is a necessary structural feature of the Trump Account design. Because Trump Accounts receive government seed money, they must have lock-up periods, designated uses, and penalties. Without these rules, the government’s seed money would be no different than writing a no-strings-attached check. Once taxpayers are not just saving their own income but receiving a public subsidy, the account stops being a neutral savings tool and becomes a transfer program that requires guardrails to meet lawmakers’ goals.
There is also a second-order effect. Once Congress creates special-purpose accounts for activity X, it becomes politically irresistible to create separate accounts for Y and Z. If newborns deserve special savings accounts, why not first-time homebuyers? Or apprentices? Or college athletes?
Sens. Marsha Blackburn (R‑TN) and Maria Cantwell (D‑WA) recently introduced the Helping Undergraduate Students Thrive with Long-Term Earnings (HUSTLE) Act, which would create yet another tax-advantaged account tailored to a narrow group, college athletes with NIL income. The Trump administration briefly floated the idea of letting people tap their 401(k)s for a down payment on a house.
The Republican Study Committee’s “Reconciliation 2.0” proposal doubles down on the same model. It includes:
- Home Savings Accounts for first-time home buyers;
- Residential Emergency Asset Accumulation Deferred Taxation Yield (READY) Accounts for disaster recovery savings;
- Health Freedom Accounts for government-subsidized health care;
- Jumpstart Accounts for apprenticeships and small-business formation; and
- 401(k) expansion for stay-at-home parents.
Each proposal may address a real financial need or inequity in the existing system, but carving the tax code into a patchwork of special-purpose accounts makes the barriers to savings faced by most Americans worse, not better.
The complexity of the existing system and restrictions on how saved funds can be spent discourage uptake, especially among young and low-income savers, for whom liquidity (quick access to their savings) is most important. Every new specialized account further complicates the system, advantaging those who can navigate the rules. It leaves behind those without the time, income stability, or financial literacy to optimize across multiple savings vehicles.
Universal Savings Accounts Fix Complexity
Instead of adding more complex savings vehicles to an already fragmented system, lawmakers should consider creating a Universal Savings Account (USA). A Universal Savings Account would allow individuals to save after-tax income and withdraw the principal and gains tax-free at any time for any purpose. No use restrictions. No phaseouts. No penalties. No bureaucratic micromanagement of how families allocate their own resources.
Because USAs would not include government-matching funds or other targeted subsidies, they would not need restrictions on how and when funds could be spent. When people are saving their own money, the justification for paternalistic rule-making disappears.
This is the core tradeoff policymakers keep avoiding. If the goal is redistribution, then lawmakers should say so and design a transparent transfer program. If the goal is personal savings and financial resilience, then simplify the tax treatment of savings by getting the IRS out of the way. Trying to do both through narrow tax-preferred accounts guarantees complexity and limits effectiveness.
Instead of adding savings accounts for down payments, disaster preparation, health, job training, and athlete income on top of Trump Accounts, 529s, IRAs, and 401(k)s, Congress should let Americans save for whatever they think matters most. A well-designed Universal Savings Account would allow just that and make most niche proposals for specific new accounts unnecessary.