More Americans are using a trick that can help you save money for retirement—there's just 1 catch via CNBCMakeIt
More and more Americans are using a health savings account : As of January 2017, 21.8 million people had opened a HSA, a 9 percent increase in enrollment from 2016. Besides being a good way to save money on health care costs, HSAs can supplement your retirement savings.
Whether or not you have access to an HSA"is really employer-decided," says Andrew Crowell, vice chairman of Wealth Management at D.A. Davidson."This is just a benefit that's available to the employees of companies that fall within a high-deductible health plan." For 2019, the HSA contribution limit is $3,500 per year if you're single and $7,000 per year if you have a family. If you're 55 or older, you can make an additional $1,000"catch up" contribution.
Since your HSA is not tied to your employer in the manner of a 401, you can choose whatever provider you want."Typically, the [HSA] providers offer mutual funds — some more aggressive than others — but a range of mutual funds or index funds that the contributions could be invested in," says Crowell. That said,"you want to make sure you're not pushing the boundaries of what's considered a medical expense," because if you use your HSA funds for something other than qualified medical expenses, Crowell says, you'll be hit with a 20 percent tax penalty."This is not an area where you ever want to get in the grey zone because the penalties are stiff."
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