Author Topic: Stop Making 401(k) Contributions -- Fill Up Your HSA First  (Read 761 times)

katsiki

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Stop Making 401(k) Contributions -- Fill Up Your HSA First
« on: October 09, 2018, 09:46:45 PM »
Stop Making 401(k) Contributions -- Fill Up Your HSA First

https://www.forbes.com/sites/robertlawton/2018/09/09/stop-making-401k-contributions-fill-up-your-hsa-first/#67b4bb043f3b

Nice to see this on a major site!  I learned of this tip here and from MadFientist.

MDM

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Re: Stop Making 401(k) Contributions -- Fill Up Your HSA First
« Reply #1 on: October 10, 2018, 12:29:24 AM »
Interesting article.

Getting a 401k match, however, still seems generally preferable.  The article states
Quote
You may be surprised that I am prioritizing HSA contributions ahead of employee 401(k) contributions that generate a match. There are good reasons.

Besides being triple tax-free and not being subject to age 70 1/2 required minimum distributions, these account balances will likely be used every year. Unfortunately, you may die before using any of your retirement savings. However, someone in your family is likely to have health care expenses each year.

But then it also states
Quote
Investing HSA contributions important

The keys to building an HSA balance that carries over into retirement include maxing out HSA contributions each year and investing unused contributions so account balances can grow.

- If "these account balances will likely be used every year" then "investing unused contributions" won't happen because there will be none unused.  Can't have it both ways.
- Doubling your money due to the employer match in a 401k is better than "triple tax free" unless the tax rate on 401k withdrawals reaches 50%.