These savings accounts are FDIC insured and could make you 12x your bank
Many people are missing out on guaranteed returns as their money languishes in a large bank savings account that earns almost no interest. Our picks of best online savings accounts, as reported by The Ascent could earn an investor 12 times the national average savings account rate. This change in investments is worth considering. The article opens with a discussion of health savings accounts, or HSAs. These accounts are only available to those with high-deductible health insurance plans, but they offer a triple-tax advantage: they’re funded with pre-tax dollars, the money grows tax-free, and withdrawals for eligible medical expenses are tax-free.
According to The Ascent, in 2024, individuals will be able to contribute about 8% more to their HSA with an individual plan and about 7% more with a family plan. These increased contribution limits are worth considering, especially if you’re currently not investing your HSA funds. Depending on where you open your account, you may be able to invest the money, which can function as another piece of your retirement puzzle.
The article also encourages readers to start thinking ahead and making a plan. While contributions can’t be raised until 2024, now is a great time to consider how much to contribute, raise contributions with your company’s human resources department, and check whether your HSA funds can be invested.
Summary:
The Ascent begins their article by discussing the benefits of a health savings account (HSA) for those with high-deductible health insurance plans. They discuss the triple-tax advantage of HSAs, with pre-tax funding, tax-free growth, and tax-free withdrawals for eligible medical expenses. In 2024, individuals will be able to contribute about 8% more to their HSA with an individual plan, and about 7% more with a family plan. This is worth considering, as depending on where you open your account, you may be able to invest the money. The article encourages readers to start planning for contributions and investments now.
Additional Piece:
Saving money, especially for retirement, can be a challenge. Many people choose to use their employer’s retirement plan, like a 401(k), or open an individual retirement account (IRA) to help them save. However, the HSA is another savings account to consider. HSAs are often described as “the ultimate retirement account” due to their tax advantages and investment options. In this additional piece, we’ll explore HSAs further and why they can be a great addition to your retirement savings.
Firstly, let’s summarize the benefits of HSAs. As mentioned in The Ascent article, HSAs are funded with pre-tax dollars, the money grows tax-free, and withdrawals for eligible medical expenses are tax-free. Additionally, if you use the funds for non-medical expenses before age 65, you’ll face a 20% penalty. But after age 65, you can use the money for non-medical expenses without penalty, although you will have to pay taxes on the withdrawal. This means that if you don’t use all your HSA funds for medical expenses, you can still use them for retirement.
In terms of investment options, HSAs can vary by provider. Some HSAs are designed as savings accounts, with low interest rates. However, others allow for investing in stocks, bonds, mutual funds, and other securities. This can be a great option for individuals looking to grow their retirement savings with a more aggressive investing approach.
In addition to tax advantages and investment options, HSAs have other benefits. For example, there are no minimum distribution requirements, unlike with traditional IRAs or 401(k)s. You also don’t need to withdraw the funds by a certain age, although there are certain requirements to avoid the penalty for non-medical expenses before age 65. This means that you can let your HSA funds grow for years, giving you more money for retirement.
Overall, HSAs can be a great addition to your retirement savings plan due to their triple-tax advantage, investment options, and lack of minimum distribution requirements. If you’re eligible to open an HSA, consider using it for both health expenses and retirement savings. It’s never too early to start planning for retirement, and the sooner you start saving, the better off you’ll be.
—————————————————-
| Article | Link |
|---|---|
| UK Artful Impressions | Premiere Etsy Store |
| Sponsored Content | View |
| 90’s Rock Band Review | View |
| Ted Lasso’s MacBook Guide | View |
| Nature’s Secret to More Energy | View |
| Ancient Recipe for Weight Loss | View |
| MacBook Air i3 vs i5 | View |
| You Need a VPN in 2023 – Liberty Shield | View |
Key points
- HSAs are only available to those with high-deductible health insurance plans.
- They have a triple tax advantage, because they’re funded with pre-tax dollars, the money grows tax-free, and you can make tax-free withdrawals for eligible medical expenses.
- In 2024, you’ll be able to contribute about 8% more to your HSA with an individual plan and about 7% more with a family plan.
If you have a high deductible health insurance plan, you may have heard of it health savings accounts (HSA). With a high-deductible plan (defined as one with a deductible of at least $1,600 for an individual or $3,200 for a family in 2024), you are eligible to open one. An HSA is a special type of savings account which is designed to hold money set aside for qualifying medical bills.
And unlike their similarly named brethren, flexible spending accounts (FSAs), HSAs are actually flexible. You can decide how much you pay (up to the annual limit, which I will discuss below) and you can renew your contributions every year. And in case you’re still not completely convinced by HSAs, wait, there’s more!
HSAs have a triple tax advantage, as the money you finance them with reduces your taxable income for that year. Then the money grows tax-free, and you won’t even pay tax when you make withdrawals to cover qualified medical expenses. HSAs can even form another piece of your retirement puzzle because, depending on where you open your account, you may be able to invest the money.
If you already have an HSA or will be switching to a high deductible health insurance plan in 2024 and then opening one with a bank, there is some good news. Contribution limits will be increased. Here’s what you need to know.
Save: This credit card has one of the longest 0% introductory APR periods around
More: Save while you pay off debt with one of these top-notch balance transfer credit cards
HSA 2024 contribution limits
Many Americans have struggled with inflation over the past year and that has changed, but HSA limits will change next year to keep up. For 2024, those with an individual health insurance plan and an HSA can contribute up to $4,150 to their account, up about 8% from the $3,850 limit in 2023. If you have a family plan, you can contribute $8,300, up about 7% from the 2023 limit of $7,750.
If you’re over age 55, you can make recovery contributions of an extra $1,000. This means that if you and your spouse (also over 55) are in a plan together, your total contributions can be $10,300. These hikes are worth taking advantage of, thanks to the tax and flexibility benefits I discussed above.
Make a plan now
How to take advantage of this change? It’s only mid-2023, and you can’t make higher contributions to your HSA until 2024, but now is a great time to come up with a plan. If you can afford to contribute up to the limit for your type of account, it’s definitely a good idea, because you’ll be able to grow the money if you don’t use it for medical bills. You’ll need to get in touch with your company’s human resources department to raise contributions of each of your payrolls in 2024. And if you’re not currently investing your HSA funds, check with the financial institution holding your account to see whether you are authorized and what types of investments you will have access to.
An HSA can be a great way to optimize your healthcare spending, and being able to contribute more money to one next year can help reduce your taxable income. AND potentially help fund your retirement. What’s wrong?
These savings accounts are FDIC insured and could make you 12x your bank
Many people are missing out on guaranteed returns as their money languishes in a large bank savings account that earns almost no interest. Our picks of best online savings accounts it can earn you 12 times the national average savings account rate. Click here to discover the best-in-class picks that earned a spot on our list of the best savings accounts for 2023.
https://www.fool.com/the-ascent/banks/articles/the-irs-is-increasing-contribution-limits-for-health-savings-accounts-and-you-should-take-advantage-asap/
—————————————————-