fbpx

Higher HSA Contribution Limits

Higher HSA Contribution Limits

If you have an HSA or are planning on opening one, you’re in luck: The IRS has announced higher contribution limits for 2020. Starting next year, you can contribute up to $3,550 for individual coverage, or $7,100 for family coverage. And, if you’re 55 or older, you can contribute an additional $1,000 per year. You can contribute to an HSA if you have a health plan with a minimum annual deductible of $1,400 for individual coverage or $2,800 for family coverage.

You can reduce your taxable income by contributing to an HSA even if you don’t itemize your taxes. Since it’s a tax advantaged account, the higher your tax bracket, the bigger your savings. It can be a powerful retirement savings tool because you can let the funds grow tax-free for as long as you want, and then withdraw money tax free for qualified medical expenses. After you turn 65 you can withdraw funds for nonmedical uses and pay the same tax you would on withdrawals from a traditional retirement account.

While it’s helpful to contribute enough to cover your out-of-pocket medical expenses for the year, it can be better to contribute the maximum amount in order to benefit from the investment. You can create an investment strategy for your HSA just like you would with a 401(k) or IRA, and use it to help cover the rising cost of healthcare in retirement. You can shift to lower-risk investments as you get older, and rely on the account once you’ve retired and no longer receive healthcare coverage from your employer.

You’ll want to avoid using the account to pay for nonqualified expenses, as you’ll pay both a tax and a 20% penalty on withdrawals before age 65. Also keep in mind that passing on an HSA to anyone except your spouse will also pass on a tax burden: non-spouse beneficiaries will have to pay taxes on the balance the year they inherit it. So, it can be better to draw down your account balance in retirement instead of saving it for your heirs. Once you turn 65 you can’t contribute to on HSA, but you can use it to cover Medicare premiums, out-of-pocket expenses, and a portion of long-term care policy premiums.

An HSA is just one way to plan ahead for your healthcare expenses in retirement. Here at Peak Financial Freedom Group, we can help you create a comprehensive retirement plan that takes your future healthcare costs into account. Click here to schedule your no cost, no obligation financial review.

Comments (3)

  • Can I just say what a relief to find someone who really knows what theyre speaking about on the internet. You definitely know the best way to deliver a problem to mild and make it important. Extra folks need to learn this and understand this aspect of the story. I cant consider youre not more popular because you undoubtedly have the gift.

  • Meth Treatment Centers Near Me

    Heroin Rehab Near Me http://aaa-rehab.com Drug Rehab http://aaa-rehab.com Teen Substance Abuse
    http://aaa-rehab.com

Leave a Reply

Your email address will not be published.

Peak Financial Freedom Group
2520 Douglas Boulevard, Suite 110
Roseville, CA 95661

DISCLOSURE: All presentation data is provided and intended to be used for general educational purposes only and is not intended as a solicitation for you to buy or sell any financial product. None of the material in this presentation is intended to give you, nor are the presenters engaged in giving you, specific tax, investment, real estate, legal, estate, retirement, or financial advice, but rather to serve as an educational platform to deliver information; nor is it intended to show you how the strategies presented can specifically apply to your own tax, investment, estate, financial, or retirement position, but rather to offer an idea of how these principles generally may apply.

Stocks, bonds, or mutual funds have risks and can lose principal, even with a stop loss, and there is no guarantees of gains, as past performance is not indicative of future positive investment results. The sale or liquidation of any stock, bond, IRA, certificate of deposit, mutual fund, annuity, or other asset to fund a new portfolio and/or annuity may have tax consequences, early withdrawal penalties, or other costs and penalties as a result of the sale or liquidation. You can’t invest directly into a stock market index. A fixed index annuity with an income rider can protect your savings from losses and provide you guaranteed lifetime income, but you could incur surrender charges, gains aren’t guaranteed, you’ll pay a fee, and guarantees are backed by the financial strength claims paying ability of the issuing annuity company.

Illustrations/projections displayed within this presentation are hypothetical in nature and should not serve as the sole determining factor in making financial decisions. Consult with a qualified investment, tax, legal, and/or retirement advisor before making any decisions. By contacting Peak Financial Freedom Group, you may be offered additional information regarding the purchase of financial products. Seminars, radio shows, TV productions, book releases, magazine and book promotions are sponsored, promoted and paid for by Peak Financial Freedom Group, LLC. If you place assets under management with our firm, we are paid an advisory fee, and if you purchase an annuity from our firm, we are paid commissions from an insurance company.

Investment Advisor Representatives of and Advisory Services offered through Fiduciary Solutions, LLC, a Registered Investment Advisor. Peak Financial Freedom Group LLC is primarily a fixed insurance sales organization and provides no Advisory Services. PFFG Insurance Agency LLC, CA License #0N14103, is a licensed insurance agency and provides no Advisory Services. Peak Financial Freedom Group LLC, PFFG Insurance Agency LLC, and Fiduciary Solutions LLC are separate affiliated entities. Insurance products and services provided by PFFG Insurance Agency LLC and independent agents.

Jim Files CA Insurance License #0F06511 Dan Ahmad CA Insurance License #0732913

© 2020 Peak Financial Freedom Group