Health Savings Account as a Retirement Account?

Are you maxing out your 401K and IRA contributions every year and want a way to save more for retirement using a pretax method?

Another way of stashing away money pretax for your retirement is using a health savings account (HSA). That’s right, with high deductible HSA plans you can deposit up to $3,000 pretax or $5950 for families into an HSA every year.

Here’s how the money can be saved for retirement.

The money in the account and the interest earned can be withdrawn tax free for medical purposes at anytime*. If you don’t need the money for medical expenses the funds can stay in the account year after year. When You turn 65 the money can be withdrawn for any reason and you won’t pay a penalty. You will pay regular taxes, just like you would with a traditional IRA, but your money would have grown tax free until retirement.

*Some states have not enacted legislation to allow pre-tax treatment of HSA contributions or earnings. You should work with your tax advisor to ensure that you are aware of any changes that may occur in these states. For your convenience, we have identified the following states as having these tax issues: Alabama, California, New Hampshire, New Jersey and Wisconsin.