How Your HSA Can Be Used As A Second 401(k) Or IRA
- 3 years ago
Business Insider contributor Kevin Panitch has a high-deductible health plan, and uses a health savings account, or HSA, to pay for medical costs.
However, he was unaware for some time that the humble HSA is actually a hat trick of tax advantages.
That's because the IRS allows the money in HSAs to be invested, and it grows tax-free.
You can make tax-free contributions, and you can also make tax-free withdrawals to cover qualified medical expenses.
If you use the funds after age 65 for non-medical expenses, you just pay normal taxes on the money. The account essentially becomes a second 401(k).
Panitch wasn't alone in thinking that he could only 'save' the money in his HSA. In fact, only about 4% of people with these accounts invest the money!
However, he was unaware for some time that the humble HSA is actually a hat trick of tax advantages.
That's because the IRS allows the money in HSAs to be invested, and it grows tax-free.
You can make tax-free contributions, and you can also make tax-free withdrawals to cover qualified medical expenses.
If you use the funds after age 65 for non-medical expenses, you just pay normal taxes on the money. The account essentially becomes a second 401(k).
Panitch wasn't alone in thinking that he could only 'save' the money in his HSA. In fact, only about 4% of people with these accounts invest the money!