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Max out HSA or a Roth IRA first each year?

Posted on 3/3/15 at 9:18 pm
Posted by weagle99
Member since Nov 2011
35893 posts
Posted on 3/3/15 at 9:18 pm
I had an earlier thread about 401k and Roth options and received some good answers. Now I am curious about the preference of maxing an HSA before fully funding a Roth each year or vice versa. Simple answer would be to do both that that might not be feasible for awhile.

My understanding is that later in life HSA contributions can be used for non-health related expenditures?

TIA
Posted by Teddy Ruxpin
Member since Oct 2006
40578 posts
Posted on 3/3/15 at 9:28 pm to
Yes, an HSA could act like a stealth IRA.

I'd start with ROTH as depending on HSA administrator you may not have the same flexibility of investments, fees etc. Not to mention the possibility of having that option canceled by your employer. But if you can invest in the same things they are pretty equal but still ROTH due to possibility of income phase outs, higher amount you can contribute if single, and such.

Basically, there should be less BS with a ROTH.

Answer may change if you have a higher allowable HSA contribution for families or really think you'll use the money a lot. That wasn't my personal experience so I'm not good for that.

An accountant or something should show up shortly.
This post was edited on 3/3/15 at 9:32 pm
Posted by weagle99
Member since Nov 2011
35893 posts
Posted on 3/3/15 at 10:06 pm to
Good points.
Posted by Anfield Road
Home of the Blue Turf
Member since May 2012
1948 posts
Posted on 3/3/15 at 11:55 pm to
My opinion assuming equal investment options is to go with the HSA. With an HSA, there is a possibility that money will never be taxed (used as a medical expense, it is funded pre-tax and untaxed coming out as a medical expense). At worst, assuming no early withdrawals, it will act as a traditional IRA starting at age 65. Also, if funding an HSA, I think it's better if you fund it using payroll deductions as in some plans, it may be exempt from Social Security tax.
Posted by Feed Me Popeyes
Baltimore, MD
Member since Apr 2008
2104 posts
Posted on 3/4/15 at 8:08 am to
HSA contributions are FICA/Medicare tax deductible. Huge selling point.
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