Home > New Retirement Account - Ooooh Yeah

New Retirement Account - Ooooh Yeah

June 21st, 2017 at 08:56 pm

Just realized today I will add a new retirement account this weekend - how did I lose track of that? Actually I had it since the beginning of the year, it is my Health Savings Account (or HSA). However, I was not allowed to do any investing with it until it reached the $2,000 mark. Well... with my contribution this Friday I will cross that mark. Now that I can do investing, it makes it feel like a real investment account.

Yes, this is supposed to be used for health expenses, but if your expenses are minor you can just pay for them out of pocket and use the HSA as another retirement account, which is my current plan (Note its addition on the left). Yeah, as I am turning 55 this year (ugh) I won't ever get this account to a very high level, but still it helps with my taxes today (saves money on various taxes), and I don't have to worry about spending the money like I did with the Flexible Savings Account I was using previously. Plus, my employer contributes some to it (I got over $700 this year).

Its small, but adding a new account to my list of accounts is cool.

6 Responses to “New Retirement Account - Ooooh Yeah”

  1. Dido Says:

    HSAs are great, and even better when you can afford to pay your OOP (out-of-pocket) expenses from your cash flow and use the HSA to invest for health care in retirement. The HSA is the ONLY triple-tax free benefit in the tax code: tax free when you contribute, on the earnings while it's in the account, and when you take it out (as long as used for qualified medical expenses). And the employer contribution makes it even better!

  2. PatientSaver Says:

    Can you refresh me on how much you can contribute each year to it?

  3. Single Guy Says:

    I believe it is $3400 / year, but an extra $1000 if you are 55 or older. I didn't know that about the extra $1000 (drat), but will increase it next year. Also, the employer contributions count towards the limit (double drat).

  4. Dido Says:

    Confirming, Single Guy has the 2017 numbers right. Goes up to $4450 including the post-55 catch-up in 2018. Make sure you are using a tax-qualified high-deductible health care plan and not just any old plan with a high-deductible. It should have HDHP in the name of the account or otherwise specifically indicate that it is allowable. I have had an HDHP health care plan along with an HSA for 3 years now. Last year during the time I was unemployed, I was also able to get an HDHP plan on the exchange for the month that I paid my own insurance. But because of changes in the plans offered on the exchange, I would *not* have been able to get an HDHP plan on the PA health care exchanage this year--Blue Cross and Blue Shield were the ones who offered them and both drastically cut back the number of options for individually purchased insurance for 2017.

  5. rob62521 Says:

    Sounds like a fine idea. When I was working, our school district offered a similar account except if you didn't use the money by a certain date, you lost it. I never enrolled for that reason. Knowing the kinds of companies the district often dealt with, I figured it would be such a hassle to use. I got burnt when the district hired a company to send our money to 403bs...I could no longer contribute the one I had contributed to for many years and had to pick from one of the five this company would deal with...then three or four of the payments were sent to another company by mistake. So, I did not trust any of the outside companies that dealt with any of my money.

  6. Dido Says:

    Rob, That would have been an FSA rather than an HSA--not nearly so good a deal. SOrry you got burned on the 403b transfer!

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