How Do I Use My HSA As A Retirement Account?
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- Опубліковано 19 сер 2021
- How Do I Use My HSA As A Retirement Account?
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Andrew from Rock Hill South Carolina thank you sir! This is the blueprint for calling into the show. No rambling. No long winded intro story. He greeted Dave and got to his question all within 25 seconds!
I know what you mean. A lot of Dave's callers apparently think they're calling into the Dr. Phill Show.
@@MaxwellMax 😂
Thanks @LaCrux. I worked in radio for a while; the long rambling back stories are the worst!
@@kiela2 Is this the Andrew from the call?
@@LaCrux Yep.
I need a way to draw up a plan to set up for retirement while still earning passive income to meet my day to day need and also get charged lesser taxes even while in a higher tax bracket.
Don't put all your eggs in one basket; instead, diversify into different asset classes to mitigate risk. If you lack extensive knowledge, consult a financial advisor.
Accurate asset allocation is crucial with an Experts guidance. I have 850k in equity, 300K cash earning 5.25 interest, 685k in 401k, 250k cash account, 120k in car assets ( paid off cars) Gold and silver bars. age is 48. My advisor helped me realign my portfolio to my risk tolerance and it boomed overtime.
pls how can I reach this expert, I need someone to help me manage my portfolio
*Jennifer Leigh Hickman* is the licensed advisor I use. Just search the name. You’d find necessary details to work with to set up an appointment.
Wow, her track record looks really good from what I found online.i just messaged her, let's see how it goes. Thanks for the info
One of the best parts is there is no rule against how long you can keep medical receipts you have paid out of pocket for before reimbursing yourself. I keep a record of all my qualifying expenses and when I'm ready, I can reimbursement myself tax free. Until then, I just let the money stay invested and grow.
Could you explain to me what you mean by reimbursing yourself?
@@sistersquad6861 Sure. So currently I am investing all of my HSA money so it will grow, so it’s technically not available for me to use to pay for doctor visits, prescriptions, etc. so I am paying for those things from my savings and keeping the receipts/bills. Eventually I would like to pay myself back using the HSA funds that have been growing. Typically you have your HSA set up with a bank and you have a debit card and checks just as you would with you regular finances. I will talley up the medical receipts and write myself a check from HSA account. I hope that helps.
@@Sable1837 I’m still confused, would that mean you payed for the services twice? How is it a reimbursement?
@@ninetimesaday another example I saw under a different video was using this method if you’re low on cash. Say over the years I’ve had multiple root canals that I paid for out of pocket. If I kept the receipts for those procedures, then I can use them at a later date to reimburse myself for the root canals I had x years ago. Allowing me to pull that money from my account free of any tax/penalty
@@jaredchase8841After you reimburse yourself, what will you do with the cash? Dave is talking about letting it grow till retirement when it's most likely needed and shortly after the money can be used for anything not just medical. You use it just like a 401K. Put the max in each year, which Is $7300 for 2022.
Glad I watch this show, you learn something new all the time.
I do this every year with no problems. I would suggest checking with whatever brokerage you use normally. I use fidelity and can transfer my HSA balance of my work plan to them. Just keep in mind that the money you transfer counts towards your contribution limits. One thing I don't understand is I don't get the specific HSA year end report till may..... but your brokerage should be keeping the HSA contributing indicated on their end of year report so I just use that for my end of year deductions.
if you want to transfer a HSA go to fidelity and set up a no fee HSA with them. Don't go with health equity they have high fees when you invest in funds.
Perfect timing. I’m putting my notice at my current role today and my new role offers an HSA and I want to use it as an investment as well.
Just remember to check what the minimums are some are fee free as long as you keep x dollars in cash uninvested.
I wish I had seen this five years ago. It's solid advice.
We have the same HSA company as well, this is my second year doing the HSA, my only regret is we didn't do it sooner. Maxed it out last year, and will going forward.
Maxing it out is great but you can only reimburse yourself for certain expenses, correct?
@@samapples6722until you retire. Then you can essentially use it for personal stuff
@@samapples6722any expenses under your health plan. Copays, prescriptions, any other claims under your plan. Also lots of products. Look up 2024 list of Qualified Medical Expenses (QME)
Correct. If you "reimburse yourself" its completely tax free. So if you've saved $50k of medical expenses over the years receipts, you can reimburse the $50k tax/penalty free. Also, if you are over 65, you can withdraw it for any expenses with no penalty, only paid income tax, if its not for a certified health expense.@@samapples6722
I finally after 5 years just hit $10,000 in my HSA. Seems like it took forever to save the first $10K.
Right there with you!
Watch it grow with compound interest. I started just like you, then was able to max it out for the last few years. Don't touch it and watch the magic of compound interest.
@@jimhandler1129The don't touch it part is what I messed up. I've taken out probably $7.500 in the last 30 months that I could easily have paid out of my checking account. It's
If you max out, if you have a family, it's about $8000 a year. No tax on the amount you contribute, you get a deduction for it on your taxes, and then the growth is tax-free. Once it starts to accumulate 10 to 20,000, you will find out that it will grow $1000 or so a year easy. Keep it up!
I have a HSA... have over $50K in it. Highly recommend.
Trying to figure HSA’s out. Why not just invest in Roth IRAs directly if your trying to do wealth building why HSA?
Wow. That is a great sum in an HSA. I worked a longtime for a company who didn't offer HSA, but the company I'm with now does and I put in $120 a Month invested.
@@gerryortiz8324 HSA... money goes in BEFORE TAX and you spend it TAX FREE. Roth IRA... money goes in AFTER TAX and you spend it TAX FREE.
@@johnSmith-uz8nl Thanks!
@@gerryortiz8324 HSA is in addition to Roth & 401K. It can be used like a traditional IRA after age 65, basically just doubles the amount you can contribute to retirement.
Yeah I would max out the HSA after 401k match and maxing out Roth IRA. At 65 it pretty much turns into a traditional IRA or just keep receipts and pull money out tax free. Its amazing.
Use it for medical only unless you are in a very low income tax bracket.
HSA comes before Roth. It's 2nd in line behind 401k match.
Disagree. HSA is only tax free if you use it for a medical expense. Roth is tax free, all the time. Why would you fully fund the HSA first?@@robloxvids2233
My company uses Health Equity for HSAs and so far it has worked great. At age 65 a person can withdrawal from a HSA for any reason without penalty but must pay income tax on that money. The money can always be withdrawn penalty and tax free if it is used for qualified medical expenses. I keep mine is a cash account and consider it a medical emergency fund but it's quite easy to invest a portion of it for those looking to use it for wealth building.
If you don't plan on using it anytime soon, you are losing by letting it sit in cash.....you can invest most and transfer back to cash if you need to.
@@dec1slhinvest it all unless they have a minimum balance requirement. My company puts in $1800 by adding $150 each month.
I never knew you could wd the money without penalty. Thanks for this input!!
Don't just go with the one's he recommends.
I went to their site, and could not easily find the fees.
I would never do business with someone where the fees aren't up front. I would want to knows all the cost and fees of it first.
He should go shop around.
So here you are again, throwing shade to anything Dave recommends. Just because you failed to do due diligence does not mean that company is shady. You need to quit trolling Dave's channel.
@@alinatamashevich3354 then where did you find the fees on the healthequity website?
My company actually just moved to Health Equity. I haven't had any issues with finding the fee disclosures. I just started to use the investment features a few months ago. They do seem somewhat limited. The turn so far has not been very good but it's only been about 4 months.
@@alinatamashevich3354 I never said there's anything wrong with the company. And wasn't complaining about Dave.
Would you go and buy something without a price tag on it?
It's just doing your due diligence.
My employer uses Health Equity. I transfer all my funds to a Fidelity HSA I opened for myself and invest there. The Health Equity account had higher cost funds PLUS a 0.03% PER MONTH fee. So an extra 36bps per year for account fees. No fees with Fidelity.
This guy is smart to take advantage of the investment opportunity for HSA funds. We have them with my employer and I believe I am the only one who invests it. Everyone's situation is different but if you can pay out of pocket to invest your HSA and let the money grow, it's pretty remarkable.
I manage the HSA for my company. With my admin privileges, I can see some information that others aren't privy to. Can't see certain things that are private to the owner of the account. However I can tell that within our company, only 2 people max out their contributions and I am one of those. And I know that I am the only person who invests within the HSA. Honestly, most people truly don't understand the power of the HSA. I've tried to talk to a few employees about it but most aren't interested. They just receive the employer portion and might contribute anywhere from $5 to $25 per paycheck. Most simply receive the employer portion and most spend that throughout the year.
My HSA has an investment brokerage link that i can select directly from my HSA account management site. I dont know if i could just move my HSA funds to an unaffiliated brokerage while its managed where it is
Big point here. The IRS will not question HSA's a lot at all. 1:44 (as I was typing) people say how do I pay less taxes? Invest in this, use it as it is if you don't want a headache. Use it like Dave and this lady if you feel like getting fancy and having a little extra later. Definitely set it to invest it though.
Typically you need over $1,000 to start investing in a HSA account. Another great investment vessel.
My hsa is $4k than you can invest.
Do you guys have a podcast?
His HSA plan should already have an investment portion, he can just roll it into that. There is no need to go to a different company to invest.
Most do have an investment option these days, but not all do. Or the investment options are fairly limited.
@@MCgrease08 all have investment options, you are correct in that they may not have options you want, or may have high investment fees .
I was looking for this comment. My company has an investment portion as well. I was just wondering why I would roll it over to another company and I see that I don't.
@@twistnloc3247 the HSA at my current company is horrible so I roll mine into Fidelity
Right. If you moved to a new company, you can also move your old HSA to a new HSA account just like rolling over your old 401k into an IRA. You can open an HSA with Fidelity
You can also do it while still employed, you may have to keep a small amount ($1000) in your current employer sponsored plan.
Can a singel owner of an LLC COMPANY invest in HSA? If yes, how?
done anyone know the song name in the end of this video please tell us please and thank you
The Escape - Middle and End
I feel like you didn’t get into much of the discussion on the full benefits of an HSA. Don’t just use it as a tax-deferred account. Stack up your medical expenses that you pay out of pocket and then submit all of that to the HSA to get big tax-free bucks back. Also, why don’t you utilize Lively for your HSA? Have you considered Lively?
Is there a comprehensive list of HSA accounts that don't tax us to death or have high interest rates?
Watch health equity fees people!!
I would like to start an HDHP with an HSA. I’m just confused on how to get it all started. Do I have to wait for open enrollment? Grrr so many questions and already wasted years have passed.
Hopefully I’m not to late to provide advice. The HSA is a great financial resource to build wealth and save money. As a father of 3 kids, start your HSA and let it grow. I currently have over 40k in mine and that grows with a small interest of 0.8% plus the year max allowance. Typically most ppl are scared of medical bills however if your smart at planing out simple medical expenses you can get price check for everything these days. It’s nice having the peace of mine knowing your family is covered for any medical is expenses. Also you can cash out some of money for past medical bills. I broke my arm when I was 8yr and my family paid 850 in total for my recovery. I uploaded the bill and was successful in receiving the money. Hope this helps best of luck.
@@09FoxRider Why are you only making a small interest of .8% ? There have to be more options to invest your HSA money that can make close to 10%.
How do you actually invest the HSA funds? My account is through a credit union - it doesnt have a APY with that credit union account..... So lets say i have $10k in an HSA account with Visions Credit union... how do I actually get that invested outside of that Visions HSA?
Transfer to Fidelity HSA and there you will have many investment options
So I pay for my medical out-of-pocket and I keep the money growing in the HSA is that right ?
Yup, sounds about right.
Just keep records so you can pass the red face test at audit time. I too have a HDHP with an HSA but I regularly do a TOA (Transfer of Assets) to my Fidelity HSA where there are no fees. It takes about a month to move the assets and then they are mine to invest as I please.
Fidelity has much lower fees
If you are not using the money why is it a good investment?
I’m guessing my company has a FSA instead of a HSA since I have your use it all but March of the year after I contribute to it?
Yes, FSA’s don’t roll over from year unless your employer allows you to carryover part of your precious years contribution. For plan years beginning Jan 1 2024 or after your employer can offer to let you rollover $640 of the contribution to the following plan year
Hey guys, it’s cool if you can afford to pay out of pocket and reimburse yourself with HSA funds years later, but everyone needs to PUT YOUR HEALTH FIRST. Lots of people have less optimal health outcomes in these HSA plans because they don’t want to spend the money. You can still use the HSA funds and build up savings with it. So many rich people on UA-cam act like the HSA is solely a retirement plan when it’s not.
A little confused. What's the exit strategy for this account? Is Dave planning to have hundreds of thousands in medical bills when he gets real old, or do you simply withdraw it at retirement for non-medical and pay both income tax AND a 20% penalty tax? Even if you die with all that money in there, my understanding is the beneficiary has to pay income tax on that as well.
Once you're 65 you can use the funds for anything, not just health expenses. You won't be penalized for these withdrawals, but you will pay income tax on anything that isn't a qualified health expense.
@@Lumaga Didn't know about that over 65 no 20% penalty. So basically these can be like traditional IRA's if you're over 65. Nice.
@@jbarardo it also can be used to pay medicare premiums.
@@Lumaga Why not just invest in Roth IRAs I don’t see the point in using this for wealth building
@@gerryortiz8324 Anyone investing in an HSA is most likely already maxing out Roth IRA and investing in a 401K. HSA is just another retirement account. Either reimburse yourself with tax free money or use it the same as a traditional IRA
It's good to have it but I can't use it on anything if I'm 100% healthy so I use it on dentist stuff.
I wouldn't be taking medical insurance advice from people who have never had to go to the doctor. For most people, An HSA will destroy your wealth if you have a single medical test or incident. It only works if you gamble that you never need to go to the doctor.
Of course he endorses Health Equity 😂
Can someone help me understand funding the HSA but still paying for medical expenses out of pocket? I'm married with 3 kids and fully fund my HSA. I use it for our medical expenses b/c I thought that was the only thing you could ever use that money for anyways?
Hi, I am not as savvy as all these other people investing their HSA, but I fully fund one for my spouse and I ($7200/annual) and maybe use $300 for medical each year. But the cool thing, is when you are old enough to retire and be on Medicare, you can pay those premiums out of the HSA tax free. Most people either have the Medicare premiums come out of their Social Security payments or have to write a check to Medicare, this way your future medial premiums will not have to come out of SS or retirement accounts but just the HSA. That is the extent of my understanding any why people might not use any now so that in retirement there is no concern over medical cost, I hear that is the number one expense as you get older.
@@rosiej.1473 thank you!
If you don't need the money, pay out of pocket, save the receipts, and withdraw later in life when you need the money (using old receipts). That way the money can stay invested and grow (compounding interest).
The HSA has an indefinite reimbursement period. So for instance, if you have glasses like I do, I pay $160 each year for updated lenses. If I do that from age 28-65, that would be 37 years. ($160)(37)= $5920 over the course of my life. However, using the stereotypical rule of 88 (each dollar invested is worth $88 by retirement age), leaving that $160 a year to grow instead of using it to buy glasses, it would turn into $520,960 by 65 - ($5920)($88)= $520,960. At that point, you would be able to use your receipts from paying out of pocket to reimburse yourself the $5920 AFTER it grew to $520,960. So you should always try to refrain from using it and max it out every year.
@@dylanortiz8407 your calculation on rule of 88 is flawed, bases on your numbers 160 per year over 37 years will turn into 72k
All he is doing is talking about the company he uses.
He should have told them to shop around and talk to an investor before he opens any account.
The man asked Dave for advise, and Dave answered his question.
@@alinatamashevich3354 he answered in a one sided manner not giving him the best advise possible answer.
what i read if the hsa is not used for medical purposes there a 20 percent penalty.
Distributions must be for medical dental or vision purposes yes but after 65 there’s no 20% penalty but you’ll still pay income taxes
Thanks you!@@QuinnShaefferFishingBass
They charge management fees.. Go for fidelity
Why would you pay out of pocket when you could save 12, 22, 24, or more % on the expense? That's an automatic return no matter what the market is doing.
You are still saving 12,22,24% bc your contribution is a tax deduction. It took me a while to understand this “pay out of pocket” concept, but it really does work! Tax deduction, compounded growth, re-imburse yourself later in life! 👌
@@brandon8531 with an account you can only use for medical expenses? The penalty for using it for anything else is worse than the money you save.
HSA's have the potential to be triple-tax-advantaged. Always smart utilizing the right tools in the toolbelt to build wealth!
HSAs are awesome! I max mine out every year as well. I keep enough of it in cash to cover the deductible then invest the rest. Like Dave said, I also pay out of pocket for any doctor or dental appointments out-of-pocket so I don’t touch the account. Another good idea is to keep the receipts for anything you pay for out-of-pocket because you can reimburse yourself at any time from your HSA. Meaning you can let the account grow without spending from it, then when you retire you can reimburse yourself for all your medical expenses throughout your life in a huge lump sum payment, taking advantage of that third tax advantage!
Personally I would use the HSA to hold that high deductible. The rest I would use FSA to pay for medical bills.
You can only use an FSA to pay for dental and eye. I fully fund my HSA and use it sparingly. I pay for some medical out of pocket or through insurance wellness benefits. I wouldn’t use an HSA for anything other than medical, otherwise you are paying income taxes, even over 65.
Can you do both at the same time?
@@dec1slh My company offers both HSA and FSA.
@@MCgrease08 my company offers both, but I can only contribute one or the other.
@@dec1slh Then that's probably a company thing. I have the option to fund both at my employer.
Why would you pick mutual funds over index funds? I see no reason to be charged a percentage per year to "manage" my investments while also getting taxed after the fact via deferred taxes when you take the funds out. Sound like you're getting f'd twice. What am i missing here?
Health Equity actually does have low cost funds that are index funds. Their Vanguard fund, "VIIIX", directly tracks the S&P 500 and has a ridiculously low fee. Their growth fund, "VIGIX", also has a very low fee. However, Health Equity does charge a .03% monthly management fee if I'm not mistaken.
You are missing that index funds are a type of mutual fund.
I think they can make HSA so much better if they changed some of their laws about it and who can invest in it, but it seems like to me that the government is actively trying to make Healthcare more expensive
It depends what you mean by government. Those on the left are trying to give more people access to healthcare. Those on the right are trying to oppose this.
Everybody should be eligible to contribute to an HSA. Regardless of their health insurance plan. Just like there should be no income limits on Roth IRAs. Heck, there shouldn’t even be dollar amount caps on any of these retirement accounts.
If HSA funds can only be used for medical expense, why would you pay existing medical expense out of pocket just to grow HSA? At some point it's still limited to only used for medical vs your out of pocket which is much more flexible to spend on any kind of expense.
Because nursing/end of life care is ridiculously expensive. You want to give that money every chance to grow the maximum so that elderly you can afford the costs. You will more than likely need it.
At 65 you can use the money for whatever!
@@livingunashamed4869 Not tax free though, just minus the penalty. At that point you're just comparing income tax with long-term CG tax if you had put it in a brokerage instead of leaving it in a HSA.
Bc you’re building the account and don’t lose it year over year. This works well if your medical expenses are relatively low normally, so you have the money for a year where they are higher or for when you’re older and have more expenses.
@@wkseaman Just keep the medical receipts over the years and withdraw tax free money whenever you want. Its amazing tax saving account.
Using the legal rules isn’t suspicious activity.
Casey the Spammer just spam on Minority Report!
@@rlopez2626 - Great one! Keep up the fight against Casey the Spammer!
Surprised that Casey does not have cuts all over his hands for all the spam he has been doing! What a dolt.
A bit tone deaf, the caller is getting $400/year HSA contribution from the employer. He’s not making bank. A high paying job will contribute atleast 2k/year.
He may not have a choice but to use HSA for its intended purposes.
I have never worked at a company that contributed 2k to an HSA, most were/are a $500 to $750. I guess if they were contributing for a family it would be double though.
@@dec1slh ironically looks like my employer and similar competitors contributes 3k to lower level employees and 2k to higher level employees.
@@Omikoshi78 is that for both individual and family. If individual they are practically paying most of the limit. The employee only has to contribute up to 600 if they want to max it out.
@@dec1slh individual + 1. For individual only it’s $1000 or $1500.
@@Omikoshi78That's very high from what I've seen at most companies. What company contributes that much?
Rammer grifting us again into a HSA vendor he gets commish from. No doubt!