HSAs Offer Tax Benefits Beyond 401(k)s

via Wall Street Journal

When saving for retirement, there is a place to put money that may be even better than your 401(k).

Most people overlook health-savings accounts, or HSAs, as a retirement-savings vehicle. But these accounts, which were authorized in 2003, come with more tax advantages than 401(k)s and individual retirement accounts when used to cover medical costs, which are a major expense in retirement.

“It’s the most tax-preferred account available,” says Michael Kitces,director of financial planning at Pinnacle Advisory Group Inc. in Columbia, Md. “Using one to save for retirement medical expenses is a better strategy than using retirement accounts” to cover those expenses, he says.

As with a traditional 401(k) or IRA, an HSA allows you to set aside pretax money without paying federal or state income tax on it. Most people who contribute through payroll deductions also save 7.65% in FICA tax, which finances Social Security and Medicare.

Read the full article here

 

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About thebenefitblog

Eric is a Producer at Lockton Insurance Brokers, Inc., the world’s largest privately held commercial broker. Eric has over 23 years of experience in the insurance industry and has spent the last 11 years with Lockton. Eric specializes in Health & Welfare Benefits, Retirement Planning, and Executive Benefits. Eric's clients utilize his expertise in the areas of Plan Due Diligence, Transaction Structure, Fiduciary Oversight, Investment Design, Compliance and Vendor negotiation to improve the operational & financial outcome for each client. The Benefit Blog is a place to share that expertise and industry news.
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