Is a health savings account (HSA) an IRA in disguise? Bankrate.com reporter Sheyna Steiner called to ask if an HSA can be used to supplement retirement savings and if there is anything unique that savers need to know about HSAs before using them.
There are some very unique aspects to the HSA that can make it even better than an IRA. For one, it’s triple, tax-free where as all of your other IRA’s are double tax-free. Second, you don’t have to take the money out of the HSA in the year the medical expense is incurred. This means that your HSA money can continue to grow, tax-free until you cash out those expenses years down the road.
“Keep a list of your qualified health care expenditures and receipts. Then, when you need money to pay for your kid’s college, take the vacation you always wanted — even before age 65 — you can pull it out of the account and report an equal amount of health care expenditures from prior years on your tax Form 8889 for that year,” says Matt Rinkey, president of Illumination Wealth Management in San Diego.
You can read the rest of the article with additional HSA tips & tricks here.