Retiree and HSA accounts?


J

JJ

I'm going to retire next year and the only health care plan my employer
offers to early-retirees is an HSA account. If you have no earned income,
is it allowable to fund an HSA?
Second question: Why bother? Isn't the main advantage of an HSA is funding
in pre-tax dollars? Is there any other reason (or tax advantage) I should
put money into the account, rather than just paying out of pocket?

Thanks,
 
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P

Paul Thomas, CPA

JJ said:
I'm going to retire next year and the only health care plan my employer
offers to early-retirees is an HSA account. If you have no earned income,
is it allowable to fund an HSA?
Second question: Why bother? Isn't the main advantage of an HSA is
funding in pre-tax dollars? Is there any other reason (or tax advantage)
I should put money into the account, rather than just paying out of
pocket?



Assuming you can make contributions to the HSA with pre-tax dollars, you
gain a 100% deduction for every dollar contributed. When they are used to
pay for qualified medical care, there's no tax implications.

To pay for those medical expenses with after-tax dollars means they fall to
Schedule A, subject to a 7.5% of AGI floor. Smaller tax deduction - if at
all.

I don't know for sure, but maybe the HSA can be funded pre-tax with
retirement money?

Still not a bad deal.
 

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