HRA $ to Roth IRA

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Topic Author
vanrufus757
Posts: 8
Joined: Tue Dec 15, 2015 2:57 pm

HRA $ to Roth IRA

Post by vanrufus757 »

My wife is 10.5 years older than I am and just retired with a HRA with about 20K.
I will continue to work for 8-10 more years, retire when I am 55-57, and I will carry the family insurance for the next 10 years while employed (god willing).
I will also retire with health care benefits (my own HRA) that will carry me to 65/Medicare.

I pay about $250/month in health care contribution which we could be reimbursed for each month from my wife's HRA. We do not need the money in our monthly budget and we could then turn around and invest the $250/month into a Roth IRA which we did fully fund until her retirement (we hit our retirement goal for her and stopped her contribution).

Thoughts ?
Flyer24
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Re: HRA $ to Roth IRA

Post by Flyer24 »

An HRA doesn’t go with someone upon retirement. Are you sure this isn’t an HSA?
Topic Author
vanrufus757
Posts: 8
Joined: Tue Dec 15, 2015 2:57 pm

Re: HRA $ to Roth IRA

Post by vanrufus757 »

Yes, she is a retired teacher. The school district funded it. It is not an HSA. The HRA is a set amount and you cannot invest the money.
livesoft
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Re: HRA $ to Roth IRA

Post by livesoft »

Well, I'm confused. It seems there are two completely separate things going on here.

1. The HRA money is being used to pay medical insurance and other health expenses.

2. Someone's Roth IRA is getting more money into it. A Roth IRA is always a good idea for any leftover money available provided that one is eligible to make Roth IRA contributions because there is compensation from oneself or one's spouse during the tax year to allow that and one is not over the contribution limit.

So what was the question?
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grabiner
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Re: HRA $ to Roth IRA

Post by grabiner »

Getting money from one account to a better account is a good idea. Here, you should spend as much as possible from the HRA (which doesn't grow) so that you can invest it, in a Roth IRA if you are eligible, or even in a taxable account if you are maxing out your retirement accounts.

The more common example of this situation is with an HSA. If you are not maxing out your Roth IRA, it is worth taking money out of the HSA for medical expenses and contributing an equal amount to the Roth IRA. The money will grow tax-free either way, but Roth IRA growth can be spent on anything in retirement, while HSA growth can only be spent tax-free on medical expenses.
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