Madison MoneySports - Personal Finance Thread

[V1GiLaNtE]

The IRS max for +dependents is $7000 and does not include the employer contribution.

Kaan's right in that medical costs only go up. I think saving for medical costs 20 years from now is not something most people think of. I guess the balance going down in the short term is only relevant if you're living year-to-year with the amount you put in. I wouldn't use the full amount if I maxed at $7000 in a year, so it probably becomes a non-issue after a year.

Those of you that are maxing HSA (@7k), are you also maxing your 401k (@19k)?

No dependents so HSA max is at @3500. I don't make enough money to max 401k (one day...)

@Kaan - if you're doing the max AND employer contributions have you been hit with any penalties? Sounds like you are going over..?

Q: As the employer, can I contribute to an employee’s HSA?

 A Yes, you can contribute to your employees’ HSAs. Plus, you save on payroll and FICA taxes through taxdeductible contributions. Keep in mind, total combined employer and employee contributions to an employee’s HSA can’t exceed the annual limit set by the IRS.

---

we look at our HSA as a long term investment. yes we use it from time to time... but I increased my pre tax contributions and the "plan" is to keep it growing the best we can into retirement.

This.   IMO the HSA is best thought of as a health 401k.    You get to put in pre-tax dollars, and can make additional payments into it up to a an annual cap.   If we were on a HDHP I would be contributing the max into it to keep my taxable income as low as possible.

Is there a long term benefit to contributing to the HSA as opposed to 401k/IRA/any other tax deferred vehicle?  Is it tax free at withdrawal in the future if its used for medical expenses?

General rule of thumb of investing follows as:

1) Get employer 401k match
2) Max HSA (should be fairly easy to do at our age)
3) Contribute to Roth IRA

Once you hit Roth IRA max go back to 401k and up until maxed. Keep in mind HSA is only or medical expenses, but still a tax sheltered account which can be pulled out tax free later much like a Roth IRA.