Client Tip for October 2018: HSA CONTRIBUTIONS
Health Savings Accounts (HSAs) provide tax-advantaged savings for qualified health expenses. These accounts are available to those individuals that have a qualified high-deductible health plan.
Contributions to HSAs are made with pretax dollars and those funds grow tax free.
There are annual contribution limits and individuals who are 55 and older may make an additional $1,000 catch-up contribution annually. You cannot contribute to an HSA after you are on Medicare. However, you can pay your Medicare premiums tax-fee with your HSA account.
There is a strategy that individuals can use to make contributions which allows individuals to transfer funds from an IRA to an HSA account tax and penalty free (no 10% early withdrawal penalty). This is a once in-a-lifetime option only. The amount transferred and any other contributions made cannot total more than what the individual would be allowed to contribute to an HSA for that year.
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