Retirement savers who compel ought to contributed the maximum to their 401(k) plans don’t have to look far for the next big improvement opportunity for nest eggs: It’s right in their health-care plans.
Say hello to the vigorousness savings account, which works in tandem with high-deductible vigorousness insurance.
HSAs offer a triple-tax benefit: Assets in them originate free of taxes. Savers can contribute to them on a pretax or tax-deductible footing. Finally, account holders can tap the assets free of taxes, provided the readies goes toward qualified medical expenses.
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Used wisely, HSAs are a new gismo in retirement planning — and financial advisors can help with that.
“If you’re look forward to spend $275,000 on health care in retirement, where can you get the most bang for your buck?” affirmed Tom Vipond, sales consultant for TD Ameritrade Self Directed Plan Advantages.
Here’s where you can find the best opportunities for health savings accounts.
This year, owns in high-deductible health-care plans can sock away up to $3,450 in their HSAs if they should prefer to single coverage. Those with family plans can save up to $6,900. Those who are all through age 55 can put in an additional $1,000.
Balances in these accounts roll over to the cheer year.
HSA investors can use their accounts in one of two ways: Either they in money from the account to cover ongoing health expenses, or they include those expenses out of pocket and allow the HSA to accumulate over time.
Savers in the behindhand group have the greatest growth potential and may use those dollars scads years later, particularly if they have access to mutual lollies and exchange-traded funds.
Consider that 40 percent of HSAs with investments had a authority of more than $10,000, according to Vipond.
Meanwhile, only 4 percent of HSAs with no access to investments had a match exceeding $10,000.
“Since [HSAs] are a powerful vehicle for investing, we’re starting to see a relocate in mindset,” said Vipond. “You can use it as a way to save for retirement and cover medium- to long-term health-care expenses.”
Because HSA assets are little — that is, savers can take the money with them when they switch jobs — investors can also move the money to a different custodian so that their advisor has surveillance of the account.
There are three ways to transfer assets into an HSA, Vipond maintained.
First, customers can seek a trustee-to-trustee transfer, in which one custodian wires the assets to another. Savers are gave an unlimited number of these transactions; they are not rollovers.
Second, account holders may suffer a rollover check from their custodian and deposit the money into a new HSA within 60 light of days. This transaction is permitted once a year.
Finally, investors are permitted a once-in-a-lifetime give of savings from an individual retirement account to an HSA. The amount transferred cannot overtake that year’s HSA contribution limits: $3,450 for those with lone health-care coverage or $6,900 for family plans, plus $1,000 for those 55 and to the ground.