HSA Planning After 55: What Your Shoppers Would possibly Not Know

To say that staff who’re approaching retirement have loads on their minds is a dramatic understatement.

Within the years instantly earlier than retirement, staff who’re planning neatly ought to be occupied with their monetary safety greater than ever. Their considerations, nonetheless, are probably totally different from staff who’re a long time away from leaving the workforce. Well being financial savings accounts are one sort of planning car that’s usually ignored in the course of the pre-retirement planning course of. 

Whereas most staff are acquainted with the triple-tax advantages of the HSA choice, the problems which can be particular to older staff are sometimes ignored. A full understanding may also help pre-retirees really feel extra assured as retirement nears — and also can assist them keep away from costly errors when it comes time to enroll in Medicare.

Catching Up With HSAs

Shoppers in all probability know that they’re entitled to make greater contributions to their retirement accounts as soon as they attain age 50. They won’t know that they will make an extra $1,000-per-year contribution to their HSAs as soon as they hit age 55. That is above and past the $4,150 or $8,300 annual contribution limits that apply in 2024.

After all, shoppers must also be reminded that there’s no have to spend down their HSA balances annually and that there’s no want to empty their HSA earlier than they retire or enroll in Medicare. 

HSA balances accumulate yr after yr, and so long as the homeowners have certified medical bills, they will withdraw the funds tax-free in a future yr. Medicare premiums rely as medical bills for functions of the tax-free profit. 

As soon as they attain age 65, they will withdraw HSA funds for non-medical bills with out penalty. Any quantities withdrawn for non-medical causes, nonetheless, are topic to bizarre earnings taxes.