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Question: RMSA account?
Old 06-16-2009, 06:56 PM   #1
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Question: RMSA account?

I tried searching on this topic but couldn't find anything. I think they are fairly new since a Google search didn't turn up much on them either.

My MegaCorp is starting to offer this RMSA (Retirement Medical Savings Acct) in addition to our 401k plan. They are designed as vehicles to specifically save for medical costs in retirement. Here are the main features:

1. Like the Roth IRA, your contributions are made after-tax and earnings are tax free after MegaCorp defined retirement age of 55.
2. Unlike the Roth, after age 55 the account can ONLY be used to fund qualified medical expenses. If you seperate from MegaCorp prior to age 55, your contributions can be used for COBRA premiums.
3. After retirement from MegaCorp at age 55 or later, they offer a high deductible health plan with guaranteed coverage, but 100% employee funded. So the RMSA withdrawals post-55 can cover the premiums for this policy (or a different policy if you chose).
4. MegaCorp gives you a $5k jump-start in the account; and matches 50 cents per dollar contributed, up to $1500. The catch is, if you seperate from MegaCorp prior to age 55 you forfeit MegaCorp's contributions (your contributions you get to keep).

Those are the main features I can think of. I'm 37 so I still have quite a few years to go until 55...what do you all think? Should I contribute to this RMSA account or not?

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Old 06-16-2009, 07:17 PM   #2
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I think it depend on your expected medical needs. My paternal grandmother didn't spend a single penny for medical services for herself from age 22(last child) thru age 76. At age 77, earlier this year, she spent money out of pocket to have cataract surgery. Her son, my father, has spent 10's of thousands out of pocket for himself in his 50's. So, it varies greatly from person to person. If you take prescriptions or think you'll need to or if you have a family history of chronic health issues then go for it.
For me personaly, I don't believe i'll need(or seek) much medical care before age 59 1/2 and after that i'll use my 401K money as needed. I also plan on retireing before age 55 so I wouldn't get to keep the company match.

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Old 06-16-2009, 08:39 PM   #3
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I've never heard of this. What's the enabling tax legislation? It almost sounds like a "Roth HSA" but there's no such thing....
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 06-16-2009, 08:55 PM   #4
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Ziggy, not sure. Like I said, not too much out there when I google it. I did find this presentation from United Health:

plus, I came across a few other megacorps that offer it...but not much info beyond that...
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