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Started By
Message
re: 401k contribution for year maxed out - what next
Posted on 9/21/17 at 9:32 pm to Volvagia
Posted on 9/21/17 at 9:32 pm to Volvagia
Why? What's so special about the hsa?
You can deduct a little more since it's pre tax vs the roth but you have to wait five more years to takes money out unless it's for medical expenses.
I just use mine to invest and pay medical fees out of pocket.
You can deduct a little more since it's pre tax vs the roth but you have to wait five more years to takes money out unless it's for medical expenses.
I just use mine to invest and pay medical fees out of pocket.
This post was edited on 9/21/17 at 9:37 pm
3
Posted on 9/21/17 at 10:14 pm to ghost2most
You never pay taxes on it as long as you follow the rules. Ever.
Posted on 9/22/17 at 1:26 am to ghost2most
I'm ignorant when it comes to hsa? Why should one have it or use it? Thx
Posted on 9/22/17 at 4:35 am to ghost2most
HSAs are extremely powerful, which is why the amount you can put in them is relatively limited especially when unmarried.
You can put money in to a tax shield without paying taxes on it.
It is allowed to be invested into the market without incurring taxes in any form.
You are allowed to withdraw even the earnings without incurring any taxes as long as it is for qualified medical expenses, which may soon include paying premiums of health insurance.
The asset remains in retirement, where health care costs balloon and can easily eat up to a third of your total nest egg, allowing to to pay for it completely tax free without having to draw down the 401k.
And wait for the kicker: after attaining the age of 65, you can withdraw from the account the same as an IRA in addition to tax free medical withdrawals. Also, unlike a 401k, there are no required minimum withdrawals.
No wait, here is the kicker: If you pay you medical expenses out of pocket, and keep the records, there is no time limit to reimbursing yourself for medical expenses. Which means the bills for those dentist appointments and the occasional doctor visits can be regarded as payments into an emergency fund.
So given all that........why contribute primarily to a relatively limited option if an HSA can do everything it does and more? The only real thing you lose is the ability to backdoor into a Roth. And considering the fact that it merges the best of tax treatments of both a traditional and Roth....who cares?
High deductible plans aren't for everyone.
If you are one of those lucky ones, take advantage and put every investment dollar you can afford after your 401k match.
It's an emergency fund (most plans require some portion to remain un invested), health safety net giving you some options in dire medical situations and the insurance cuts you off, and a retirement fund all in one.
Talk about your money working for you.
You can put money in to a tax shield without paying taxes on it.
It is allowed to be invested into the market without incurring taxes in any form.
You are allowed to withdraw even the earnings without incurring any taxes as long as it is for qualified medical expenses, which may soon include paying premiums of health insurance.
The asset remains in retirement, where health care costs balloon and can easily eat up to a third of your total nest egg, allowing to to pay for it completely tax free without having to draw down the 401k.
And wait for the kicker: after attaining the age of 65, you can withdraw from the account the same as an IRA in addition to tax free medical withdrawals. Also, unlike a 401k, there are no required minimum withdrawals.
No wait, here is the kicker: If you pay you medical expenses out of pocket, and keep the records, there is no time limit to reimbursing yourself for medical expenses. Which means the bills for those dentist appointments and the occasional doctor visits can be regarded as payments into an emergency fund.
So given all that........why contribute primarily to a relatively limited option if an HSA can do everything it does and more? The only real thing you lose is the ability to backdoor into a Roth. And considering the fact that it merges the best of tax treatments of both a traditional and Roth....who cares?
High deductible plans aren't for everyone.
If you are one of those lucky ones, take advantage and put every investment dollar you can afford after your 401k match.
It's an emergency fund (most plans require some portion to remain un invested), health safety net giving you some options in dire medical situations and the insurance cuts you off, and a retirement fund all in one.
Talk about your money working for you.
This post was edited on 9/22/17 at 5:28 am
Posted on 9/22/17 at 8:28 am to Volvagia
Good post. Thanks for the info and some food for thought. At my company, they give us $1,000 to go toward the high deductible plan if we choose it.
There are really very few restrictions on investing, no limit that you must have liquid. For the last few years, I just take the money and put it in the market.
My wife isn't on my insurance so I'm capped at $3,400. For the first few years, I never even went to the doctor so this was even better.
This year, I had an eye injury and probably spent about $1,200 out of pocket on doctor, RX, etc.
Was considering switching to another plan with a traditional co-pay, etc. but I'm second guessing that now.
It's a fine line of wanting to save and not wanting to skimp on medical stuff because I don't want to pay for it, haha.
There are really very few restrictions on investing, no limit that you must have liquid. For the last few years, I just take the money and put it in the market.
My wife isn't on my insurance so I'm capped at $3,400. For the first few years, I never even went to the doctor so this was even better.
This year, I had an eye injury and probably spent about $1,200 out of pocket on doctor, RX, etc.
Was considering switching to another plan with a traditional co-pay, etc. but I'm second guessing that now.
It's a fine line of wanting to save and not wanting to skimp on medical stuff because I don't want to pay for it, haha.
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