The Tax-Free Retirement Account You Missed

When discussing personal retirement savings, it’s not often you read about a new retirement account. New strategies or tactics are common, but a new account is unique.

While an HSA is not new to the market (they have been around since 2004), their application to retirement healthcare is. Let us show you why HSAs are equally helpful for healthcare and retirement savings.

The New Stealth IRA

An HSA or Health Savings Account is a personal savings account for health expenses. An HSA is not a health plan but can be used in conjunction with HSA-eligible health plans, like HDHPs, to save tax-free dollars on health expenses.

HSAs allow for tax-deductible contributions, tax-free interest and tax-free withdrawals (for medical expenses). In 2019, individuals can contribute up to $3,500 in tax-free savings and families can contribute $7,000.

HSAs were intended for health savings, but as part of their tax-structure, they have one extra perk, retirement savings. After the age of 65, you can use your HSA funds for anything, just like a 401(k) or IRA. In that sense, they mimic the IRS tax structure of a 401(k) or IRA.

HSAs also have no mandatory distributions, so you can let any HSA investments grow as you see fit into your 70s, 80s, and 90s. It’s nice to have control!

No matter the intended use of an HSA, they create additional tax-free retirement savings opportunities. Top that off with the added flexibility of saving for healthcare and retirement at the same time to create an incredible tax-advantaged opportunity.

Combining a 401(k) or IRA with an HSA

The more money you have for retirement, the better. By combining the tax value of a 401(k), IRA, and HAS, you get to keep the more of your money (from the IRS) and save for retirement.

Did you know that in retirement, a couple can expect to spend $275,000 on health costs? This is on top of Medicare coverage. The only way to pay 100% tax for these expenses, is which your HSA.

HSA savings paves the way to cover health costs for today and in retirement. Combined with a 401(k) or IRA you can maximize your tax-free retirement savings potential and keep more of your hard-earned money. You can review your eligibility and open an HSA here.

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