Hi there,
I've been reading a ton to try to set myself up for FIRE in 5 years. One of the investments I planned to prioritize was my company's HSA (Health Savings Account), because contributions are tax-free, as are withdrawals. So I planned to max out my contribution to my HSA each year while I'm still working, invest that money through the HSA offerings, and then sit on those investments until I need the money for health-care expenses in older age.
However, I recently found out that once I leave my job, I will be responsible for the account maintenance fees, which are $5.50 per month if the HSA is an investment account. IMO, that's quite a high fee ($90/year) considering that the balance of this account will only be about $17,000.
I'm sure others have dealt with this question too... What is the the best strategy is for taking advantage of the HSA's tax benefits but not paying too much in fees? The options I can think of are:
A) For the next 5 years (while I'm working), contribute the max amount to my HSA and invest it in something like a total stock market fund. Then when I retire, move the money into a cash account (where it won't gain any interest). Spend that money as I need to on health-related costs over the next few years, so that I'm spending it tax-free but also not leaving a ton of money sitting in a place where it can't grow.
B) For the next 5 years, contribute the max amount to my HSA, invest it in a total stock market fund, and go ahead and withdraw funds as I incur any health related costs along the way.
C) Max out my contribution to the HSA, invest funds, leave them invested for the long-term and pay the $5.50/month.
D) Don't contribute to HSA, and instead, invest that money myself. (But then I don't get the tax-free contributions + withdrawals benefit.)
E) Something else?
Thank you!
I've been reading a ton to try to set myself up for FIRE in 5 years. One of the investments I planned to prioritize was my company's HSA (Health Savings Account), because contributions are tax-free, as are withdrawals. So I planned to max out my contribution to my HSA each year while I'm still working, invest that money through the HSA offerings, and then sit on those investments until I need the money for health-care expenses in older age.
However, I recently found out that once I leave my job, I will be responsible for the account maintenance fees, which are $5.50 per month if the HSA is an investment account. IMO, that's quite a high fee ($90/year) considering that the balance of this account will only be about $17,000.
I'm sure others have dealt with this question too... What is the the best strategy is for taking advantage of the HSA's tax benefits but not paying too much in fees? The options I can think of are:
A) For the next 5 years (while I'm working), contribute the max amount to my HSA and invest it in something like a total stock market fund. Then when I retire, move the money into a cash account (where it won't gain any interest). Spend that money as I need to on health-related costs over the next few years, so that I'm spending it tax-free but also not leaving a ton of money sitting in a place where it can't grow.
B) For the next 5 years, contribute the max amount to my HSA, invest it in a total stock market fund, and go ahead and withdraw funds as I incur any health related costs along the way.
C) Max out my contribution to the HSA, invest funds, leave them invested for the long-term and pay the $5.50/month.
D) Don't contribute to HSA, and instead, invest that money myself. (But then I don't get the tax-free contributions + withdrawals benefit.)
E) Something else?
Thank you!
.
