Author Topic: HSA Account, when is enough?  (Read 2207 times)

chasesfish

  • Magnum Stache
  • ******
  • Posts: 3081
  • Age: 37
  • Location: Texas
    • Years in the making, I created a journal!
HSA Account, when is enough?
« on: September 21, 2013, 08:36:12 AM »
I'm starting to debate this.  I've been using an HSA account for eight years and together with maximized contributions, few medical expenses, and some decent investing, I'm about to eclipse $40,000 in the account at the ripe old age of 31.  The pre-FICA deduction piece is no longer valuable to me since I'm going over the withholding limit anyways.  I also purchase dental insurance, which cuts down on my HSA expenses.

I'm debating dropping my contributions from $5,500/year to $1200. 

We're also already maximizing all other available tax preferred retirement accounts, but need to build more liquid savings to walk away from work before we hit 40.

Any opinions on this idea?

aj_yooper

  • Handlebar Stache
  • *****
  • Posts: 1091
  • Age: 8
  • Location: Chicagoland
Re: HSA Account, when is enough?
« Reply #1 on: September 21, 2013, 05:57:47 PM »
That is pretty amazing!  Smart.

It's always good to have a good sum in a taxable account, but don't you still get the tax deferred aspect in a HSA, even if you are past the FICA upper limit?  If so, that would be a definite plus for me to keeping it going.  Your HSA could also be thought of as a way in the future possible medical expenses 401k+.  When you are no longer working a regular job, can't the funds then revert to an account type of IRA? 

Is your dental insurance paid for with pre-tax dollars?

chasesfish

  • Magnum Stache
  • ******
  • Posts: 3081
  • Age: 37
  • Location: Texas
    • Years in the making, I created a journal!
Re: HSA Account, when is enough?
« Reply #2 on: September 22, 2013, 07:02:17 AM »
Thanks for the reply.  I do still get the pre-tax benefit of the contribution, but the pre-FICA doesn't have any benefit to me since the marginal $6,000 in income I earn isn't subject to FICA.

The account can be rolled over, but always has to stay as HSA Funds, which would fund future medical expenses.  I am trying to figure out when there is enough in the account, especially since the ACA increased penalties for non-medical withdraws.

Dental insurance is paid pre-tax, pre-fica. 

thepokercab

  • Bristles
  • ***
  • Posts: 486
Re: HSA Account, when is enough?
« Reply #3 on: September 22, 2013, 08:19:35 AM »
Quote
The account can be rolled over, but always has to stay as HSA Funds, which would fund future medical expenses.

I max out an HSA myself, and will continue to do so as long as i'm eligible.  I actually think of it as having a Traditional IRA on top of my Roth IRA, since once you turn 65 you can use funds in the HSA for ANY purchase, medical or not.  So i think its a great place to stash additional "old man money" tax free while continuing to build up my taxable accounts.  Of course, i'm putting less money in my taxable accounts since its going into my HSA, but then again i'm getting the benefit of a pre-tax deduction, plus my gains grow tax free.  So, its a matter of preference.  Either way, sounds like you've got a good plan!