Lifetime Savings Account Act of 2005

The Lifetime Savings Account Act of 2005 proposed the creation of a new type of tax-exempt savings vehicle designed to help Americans save for any purpose. Under this bill, individuals could contribute up to $5,000 in after-tax earnings annually into a Lifetime Savings Account (LSA), where the funds would grow tax-free. Unlike existing retirement or education accounts, these funds could be withdrawn at any time for any reason—such as buying a home, starting a business, or handling emergencies—without facing taxes or penalties on the distributions.

The bill also included provisions for the $5,000 contribution limit to be adjusted annually for inflation and allowed for tax-free transfers from other specialized savings accounts, such as 529 plans or Coverdell education accounts. While the legislation aimed to simplify the tax code and encourage personal savings, it did not advance past the committee stage during the 109th Congress and did not become law.