You may be aware that HSAs distributions are tax-free for qualified health care expenses but they’re also penalty-free for any purpose after age 65.
That means an HSA can also double as a tax-deferred retirement account. Keep in mind that they will still be tax-free for health expenses in retirement, which a Fidelity study estimates to be about $220k over the expected remaining life of a 65-yr old couple.
For that reason, you may not want to withdraw from your HSA today even when you have qualified medical expenses but instead allow the money to continue growing tax-free. Of course, this assumes you have adequate income or savings to cover your medical expenses now. You’ll also want to invest your HSA so it can grow for retirement.
There are lots of ways to use various tax-advantaged accounts. You’re not limited to their primary purposes. The key is to understand your options and do what makes the most sense for you.
Read the full article here.
Contact Steven Cosby with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.