HSAs have other advantages over employer-provided retirement accounts: you do not have to use your employer’s suggested HSA, and you can transfer HSA assets to another HSA account once per year. Employer-provided retirement and HSA accounts are notorious for poor investment choices and high costs. Even if you decide to use your employer’s designated HSA to obtain an employer-provided match, you are allowed to then transfer the money to your own preferred HSA immediately afterward, so you’re never stuck in a poor HSA for long. Recommended HSAs with low fees and solid investment options include HSA Bank, Health Savings Administrators, and Alliant Credit Union.
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ACEP Now: Vol 33 – No 01 – January 2014If you find yourself wanting to save more than you can put into your retirement accounts, consider using your HSA as a Stealth IRA, the only triple-tax-free retirement account.
James M. Dahle, MD, FACEP, blogs as The White Coat Investor at http://whitecoatinvestor.com. He is not a licensed financial adviser, accountant, or attorney and recommends you consult with your own advisers prior to acting on any information you read here.
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3 Responses to “A Health Savings Account May Be Your Best Retirement Plan”
February 3, 2014
Illumination Wealth Management | Illumination Wealth February 2014: The Biggest Expense Standing In Your Way To Wealth…[…] Acep Now: A Health Savings Account May Be Your Best Retirement Plan […]
June 18, 2016
Ike DalleyUseful article , I learned a lot from the analysis . Does someone know if I might be able to obtain a blank IRS 1125-A document to work with ?
April 28, 2018
JamesOne problem with HSA’s is that the rules are very vague, poorly written, and incomplete. I have a $10,000 policy for myself and my 2 teenaged kids. My wife has a very generous employee benefit from her work, but no employer subsidy for dependent coverage. She could cover us, but if she did, it would take over half her paycheck and sometime more than her paycheck.
However, my health plan is apparently considered “Individual,” not “Family,” because my wife is not on the plan, and because we do have the option of being on the employer-provided plan, even though it doesn’t make sense for us. So my HSA is considered “Individual,” and I’m held to the lower contribution limits. In fact, I’ve been advised by several accountants and tax attorneys not to contribute to the HSA at all, nor withdraw funds from it, as my wife’s status may make us ineligible to use the HSA.
Of course, there appear to be no rules describing this relatively common situation. HSA’s were designed to help the self-employed middle class, like me, so perhaps the politicians and civil service had so little interest they couldn’t stay awake to finish writing the rules.
So I’ve got $10,000 stranded in an HSA I’ve been advised not to use. I can’t transfer it to my wife because it’s an individual asset, and an individual account.
Hopefully, if the Trump Administration is the least bit serious about healthcare finance (or anything else, for that matter; tough to say at this point) they’ll finish writing the rules for HSA’s. Until such time, I can’t recommend them.