Posted this a little while back, but didn't get traction. Due to a recent retirement post blowing up today, I thought I'd try again!!
First, here's the article written by The Mad Fientiest (cuz you should always go to the source!). Good dude, btw.
HSA - Health Savings Account!
Q: What is it?
A: An HSA is a tax-advantaged savings account available for people who are enrolled in a high-deductible health insurance plan.
Q: Why is it so great?
A: The HSA is billed as a savings account for health expenses but it’s really the Clark Kent of retirement accounts because it’s actually a super IRA in disguise.
Q: And why is that? The Clark Kent thing...
A: Well, Johnny, HSA account holders can contribute pre-tax dollars to the account and can then withdraw money from the account, tax free, when paying for qualified medical expenses.
Q: So.... I have to get sick or break my neck to withdraw?
A: No Johnny, don't be silly.
Q: Well you didn't bold the part about "qualified medical expenses!" What if I put all this money into my HSA but I don’t have any health issues… how will I ever get my money out?
A: Great question! And the one we've been waiting for! In this case, the account will simply act like a Traditional IRA with an increased distribution age (65 instead of 59.5 for a Traditional IRA).
Like a Traditional IRA, your contributions to the HSA are pre-tax contributions and your contributions are allowed to grow tax free. If you don’t use your HSA funds for medical expenses, you can begin withdrawing money from your HSA account for any expenses after you turn 65, without penalty. You’ll have to pay income tax on any distributions that aren’t for qualified medical expenses, just like you would with a Traditional IRA, but you won’t incur any additional penalties or fees.
Therefore, after the age of 65, an HSA is nearly identical to a Traditional IRA but it’s still better because your withdrawals for medical expenses are still completely tax free!
And if you ever DO get sick or have surprise medical bills, that’s what this is for in the first place!
So if you're young and restless... HSA!
Thoughts, comments, concerns... class?
Submitted January 03, 2017 at 03:49PM by vincent_ignatius http://ift.tt/2hN9Hic
