30 sec brief
Investing HSA funds to save for tomorrow ensures you will have money for the high cost of healthcare in retirement. Did you know, after the age of 65, you can use your HSA funds for anything, not just qualified out-of-pocket medical expenses? HSA guidelines allow users to invest their HSA funds and use any financial…
Investing HSA funds to save for tomorrow ensures you will have money for the high cost of healthcare in retirement. Did you know, after the age of 65, you can use your HSA funds for anything, not just qualified out-of-pocket medical expenses?
HSA guidelines allow users to invest their HSA funds and use any financial gains for qualified medical expenses today, tomorrow or anything in retirement. So what are the HSA IRS guidelines for investing?
Yearly HSA Investment Maximums
We have good news! In a complex and restrictive IRS regulatory healthcare space, there are no yearly HSA investment maximums.
You can invest your HSA funds no tax implications (federal). You will not be taxed on those funds unless you use them for non-qualified health distributions, after the age of 65. Warning – if you use them for non-qualified health expenses before 65, you will have to pay taxes and a penalty.
HSAs do have one predefined investment guideline, any gain is tax-free! This means there are no short-term capital gains for any HSA growth, for investments or otherwise.
This allows HSA account holders to set aside dollars to save for the long-term. You can use an HSA just like a 401k or IRA. Is an HSA the new stealth IRA? From tax code perspective it might be but with options to save, spend, or invest your HSA, you can use it in the ways that work best for you.
HSA Investment Options
Investing your HSA dollars or spending them on qualified medical expenses, is a very complex and personal decision. There are clear benefits to both short-term HSA tax-free spending and long-term HSA savings. The good news is all of these tax benefits are regulated by HSA-eligibility and contribution limits. Once you adhere to these IRS HSA regulations, you can invest your HSA without tax restrictions.
Disclaimer: nothing in this article is intended to provide investment or tax advice. Investments carry risk. Please be sure to seek advice from a qualified investment and/or tax professional prior to making any investment decisions.