The HSA is a triple tax-advantaged vehicle. You can put money in pre-tax, let your money grow tax-free, and take money out on a tax-free basis so long as it is used for qualified medical expenses. If you never take money out of your HSA, it functionally operates like a 401(k), with a few exceptions. A 401(k) will allow you to begin making withdrawals with no penalty as early as 59 and a half years old. With the HSA, you can take non-qualified distributions from your HSA after 65 years old and not pay a penalty. In both of these cases, you will pay ordinary income taxes at the time you withdraw it. Aside from the age difference (5.5 years), the big difference is that if you use your HSA funds to pay for any qualified medical expenses, you can use that money on a tax free basis! Additionally, if you are over 70.5 years old, you are required to begin taking distributions from your 401(k) or pay stiff penalties, whereas with an HSA, there is no such requirement. You can continue letting your money grow.
Articles in this section
- What is an HSA?
- How Does an HSA Work?
- What are the benefits of an HSA?
- What are the requirements of an HSA? Am I eligible?
- What designates a qualifying High Deductible Health Plan?
- Do I have to get an HSA if I am on a High Deductible Health Plan?
- How does money get into my HSA account?
- How can I get an HSA?
- If I have a family, can I still have an HSA?
- Can I have a joint-HSA with my spouse?