Do I have too much HSA money?

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tj
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Re: Do I have too much HSA money?

Post by tj »

TravelforFun wrote: Sun Nov 15, 2020 10:20 pm
wolf359 wrote: Sun Nov 15, 2020 7:21 pm
ved wrote: Sat Nov 14, 2020 9:09 pm
Spirit Rider wrote: Sat Nov 14, 2020 9:37 am It also could allow you to self-insure LTC expenses.
Can you elaborate on this? Or provide some links I can research?

Thanks
Long-term Care expenses by definition qualify as medical expenses under HSA rules. That means that if you accumulate sufficient funds in your HSA, you're essentially self-insured, because you have funds that can cover your LTC expenses.

For reference, the average lifetime LTC expenses are currently $172,000 for those who need them. (The actual costs vary by person and by state.) Source: AARP https://www.aarp.org/health/health-insu ... re-fd.html
Or you can use your HSA to pay your LTC insurance premium. This is what I've been doing.

TravelforFun
Or even just use your records of past LTC premiums paid. The IRS limits how much you can use each year based on your age.
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anon_investor
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Re: Do I have too much HSA money?

Post by anon_investor »

willthrill81 wrote: Sun Nov 15, 2020 10:17 pm
anon_investor wrote: Sun Nov 15, 2020 7:41 pm
willthrill81 wrote: Sun Nov 15, 2020 7:35 pm
neverdone wrote: Sun Nov 15, 2020 5:04 pm I have about $360K in my HSA.
Come again? HSAs didn't begin until very late in 2003. How did you get so much into it?
Sounds like neverdone did quite well on some good stock picks, Tesla and Amazon.
That sort of thing is the only explanation I can come up with.
neverdone actually said it was Tesla and Amazon stock:
neverdone wrote: Sun Nov 15, 2020 5:04 pm I have about $360K in my HSA. Retired a year ago. I treated the amount in my HSA as "fun" money and bought some stock. hsabank allows stock trades with tdameritrade. In 2016 I bought 100 shares of Tesla, cost $15K; gain about $190K. In 2018 I bought 30 shares of Amazon; gain $50K. Last week I bought 200 shares of pfizer.
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grabiner
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Re: Do I have too much HSA money?

Post by grabiner »

neverdone wrote: Sun Nov 15, 2020 5:04 pm I have about $360K in my HSA. Retired a year ago. I treated the amount in my HSA as "fun" money and bought some stock. hsabank allows stock trades with tdameritrade. In 2016 I bought 100 shares of Tesla, cost $15K; gain about $190K. In 2018 I bought 30 shares of Amazon; gain $50K. Last week I bought 200 shares of pfizer.
Welcome to the forum!

However, the HSA is not the right place for high-risk investing, because of the asymmetric tax treatment. If your HSA crashes, you lose the full amount. If your HSA booms (as this one did), you may have more money in your HSA than you need for medical expenses, and thus pay tax on some of the gains.

In contrast, if you take this risk in your Roth IRA, you take the full loss but also get the full gain. If you take this risk in your traditional IRA, 401(k), or taxable account, the IRS takes a share of your gains but gives back a share of your loss. (A taxable account has the additional problem for individual stock investing that there is a tax cost for getting back to a diversified portfolio if one stock booms.)
Wiki David Grabiner
MrBeaver
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Re: Do I have too much HSA money?

Post by MrBeaver »

z06ray wrote: Sun Nov 15, 2020 9:41 pm
anon_investor wrote: Sun Nov 15, 2020 8:53 pm
MrBeaver wrote: Sun Nov 15, 2020 8:31 pm
PhillyPhan wrote: Fri Nov 13, 2020 11:12 pm 80k in your HSA is a very impressive feat. I believe the HSA has only been around since 2003, which means if you are contributing ~3,500 per year as an individual you have reaped some good returns! Kudos!! Any six figure HSA account holders out there?
We have almost 180k right now, all with index funds (100% stock AA). Been maxing it since 2003 (some early years individual, later as family), even when income was low. A few years the deduction helped us qualify for the savers credit on Roth contributions.

Even at a 4% real return over the next 25 years until I’m 65, that will grow to 775k in 2020 dollars. Far more than I anticipate needing for health care expenses. I’m ok with that for a few reasons:
  • I like the idea of being self insured for LTC.
  • If things go south, we can use it to supplement our retirement savings, or if they go really well we could spend down Roth for early retirement and then continue to fund retirement from the HSA/other tax deferred savings.
  • If we both die, I’m not interested in bequeathing all of my wealth to individuals. In fact, the secondary beneficiary for this account is already a charity.
The biggest risk I see to this is actually legislative risk. Rules have changed in the past – early on, over the counter drugs and I think insurance premiums were eligible expenses. That was scaled back to only Medicare premiums and medications fulfilled with a prescription.
CARES act made OTC medications a qualified expense for HSAs again.
That’s a very healthy HSA. Not trying to nit pick, but how does 4% real arrive at 775k?
This assumes continued investments at the maximum allowable amount (and no withdrawals until 65). Without continued investments, 4% growth will result in $475k.

Assumptions:
Starting balance: $178k
Time invested: 25 years
Rate of return: 4% yearly
Additional investments: $7,200/year (or $0/year)
stoptothink
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Re: Do I have too much HSA money?

Post by stoptothink »

We're sitting on ~$50k in our HSA with ~$6k in receipts (rapidly rising as I am currently dealing with two health conditions). The only time we ever used the funds was to pay for the birth of my son 5yrs ago, because we didn't have $11k sitting around at the time. No plans to dip into the HSA account for a few more decades.
fcox85
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Re: Do I have too much HSA money?

Post by fcox85 »

stocknoob4111 wrote: Fri Nov 13, 2020 9:39 pm Just keep it in the HSA, the HSA becomes equivalent of a 401k when you hit 65 (with the additional tax free Medical expenses advantage) so why does it matter? Also, Medicare premiums are qualifying expenses so definitely best to have the maximum amount in the HSA due to it's flexibility. There is NO such thing as too much in HSA, HSA is the best account in terms of tax advantages.
This.

I keep enough to cover my yearly deductible in the cash/checking account within my HSA. Everything else gets swept into Vanguard funds. I think of this as just another retirement account, and the fact that it can be pulled directly from my bi-monthly paychecks makes it mindless, automatic investing. If a medical emergency ever truly hits, I have 3-5 times enough to cover any out-of-pocket, and I can simply pull it out to do so if necessary.
neverdone
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Re: Do I have too much HSA money?

Post by neverdone »

grabiner wrote: Mon Nov 16, 2020 12:31 am
neverdone wrote: Sun Nov 15, 2020 5:04 pm I have about $360K in my HSA. Retired a year ago. I treated the amount in my HSA as "fun" money and bought some stock. hsabank allows stock trades with tdameritrade. In 2016 I bought 100 shares of Tesla, cost $15K; gain about $190K. In 2018 I bought 30 shares of Amazon; gain $50K. Last week I bought 200 shares of pfizer.
Welcome to the forum!

However, the HSA is not the right place for high-risk investing, because of the asymmetric tax treatment. If your HSA crashes, you lose the full amount. If your HSA booms (as this one did), you may have more money in your HSA than you need for medical expenses, and thus pay tax on some of the gains.

In contrast, if you take this risk in your Roth IRA, you take the full loss but also get the full gain. If you take this risk in your traditional IRA, 401(k), or taxable account, the IRS takes a share of your gains but gives back a share of your loss. (A taxable account has the additional problem for individual stock investing that there is a tax cost for getting back to a diversified portfolio if one stock booms.)
Yeah, I probably agree. I invested in Tesla more as a whim. All my IRA money is in stock/bond funds; conservatively invested. If I had known TSLA would increase 10X this year I would have ...
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Re: Do I have too much HSA money?

Post by majiaknight »

Late-30s couple with HSA > $44K plan to max HSA every year until retirement and don't touch it. Pay all bills with our CC (w/ cash back :wink: ). HSA is another excellent tax-exempt retirement account for long-term passive investing. I have no doubts that DW and I will spend much more money than the HSA accumulated investment balance in retirement to pay our medical bills.
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Re: Do I have too much HSA money?

Post by bowest »

PhillyPhan wrote: Fri Nov 13, 2020 11:12 pm
Soon2BXProgrammer wrote: Fri Nov 13, 2020 9:37 pm
justsomeguy2018 wrote: Fri Nov 13, 2020 9:24 pm We are in the latter half of our 30s.

Have around $18k in HSA money. Plan to continue maxing contributions each year.

We have probably around $15k+ in medical expenses from prior years that we paid out of pocket.

Should we withdraw some to pay ourselves back? Problem is I have no idea what I would do the money. Probably just move it into a taxable account which seems inefficient. I feel like we may end up with an oversized HSA account though.

I would say so far the HSAs have earned around $1500 in innvestment returns (we only started investing them in past 2 years).
I have about 80k in an HSA and about 20k of receipts. I still keep adding to the HSA because one could have hundreds of thousands of dollars of medical expenses in retirement.
80k in your HSA is a very impressive feat. I believe the HSA has only been around since 2003, which means if you are contributing ~3,500 per year as an individual you have reaped some good returns! Kudos!! Any six figure HSA account holders out there?
I just hit 100k last week. Neat milestone. Family max and mostly 70-30 stock-bond split over past 11 years.
bberris
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Re: Do I have too much HSA money?

Post by bberris »

TravelforFun wrote: Sat Nov 14, 2020 8:59 pm
anon_investor wrote: Fri Nov 13, 2020 11:16 pm
macheta wrote: Fri Nov 13, 2020 9:25 pm I would save the receipts for an emergency. Otherwise, keep saving!
+1!
No need to save receipts now. When you get old, large medical bills come in droves.

TravelforFun
Receipts are a PITA. I save my summary EOBs at the end of the year, downloaded from the insurance co. Also reimbursable from your HSA is dental, and mileage to and from medical and dental care. I keep my dental records but not the mileage. I figure I can estimate that when the IRS comes calling.
523HRR
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Re: Do I have too much HSA money?

Post by 523HRR »

Our combined HSAs are currently $142K. We've been keeping our receipts for many years. Still contributing the annual max. Age 57/60.
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anon_investor
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Re: Do I have too much HSA money?

Post by anon_investor »

523HRR wrote: Sat Nov 21, 2020 3:54 pm Our combined HSAs are currently $142K. We've been keeping our receipts for many years. Still contributing the annual max. Age 57/60.
Curious, how much your receipts are worth?
Spirit Rider
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Re: Do I have too much HSA money?

Post by Spirit Rider »

bberris wrote: Sat Nov 21, 2020 9:04 am Receipts are a PITA. I save my summary EOBs at the end of the year, downloaded from the insurance co.
EOBs are not proof of payment.
tj
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Re: Do I have too much HSA money?

Post by tj »

Spirit Rider wrote: Sat Nov 21, 2020 8:03 pm
bberris wrote: Sat Nov 21, 2020 9:04 am Receipts are a PITA. I save my summary EOBs at the end of the year, downloaded from the insurance co.
EOBs are not proof of payment.
No, but it's probably better than nothing.
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Re: Do I have too much HSA money?

Post by Miriam2 »

Spirit Rider wrote:
bberris wrote: Receipts are a PITA. I save my summary EOBs at the end of the year, downloaded from the insurance co.
EOBs are not proof of payment.
Spirit Rider - what would you suggest we save to prove the medical bill, that we paid it, and that we were not reimbursed for it?
1 - How do we prove we were "not reimbursed" by any insurance company?
2 - Is there anything else we need to save to show the IRS if they come calling?
John Bogle, "The Twelve Pillars of [Financial] Wisdom" - Pillar 4: Nothing Ventured, Nothing Gained. Eschewing the risk of stocks, therefore, carries a risk of its own.
soxfan10
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Re: Do I have too much HSA money?

Post by soxfan10 »

Miriam2 wrote: Sun Nov 22, 2020 12:17 am
Spirit Rider wrote:
bberris wrote: Receipts are a PITA. I save my summary EOBs at the end of the year, downloaded from the insurance co.
EOBs are not proof of payment.
Spirit Rider - what would you suggest we save to prove the medical bill, that we paid it, and that we were not reimbursed for it?
1 - How do we prove we were "not reimbursed" by any insurance company?
2 - Is there anything else we need to save to show the IRS if they come calling?
I generally save the invoice from the provider with detail showing the insurance company payment - this takes a bit more time than a summary EOB. I do not save proof of payment. If the IRS wants to argue that either: (i) I didnt pay the invoice; or (ii) I had a second insurance payment, they can come at me any time.

The invoice (especially one that shows a credit from an insurer payment) provides a good faith basis to conclude that a withdrawal should be exempt.
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anon_investor
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Re: Do I have too much HSA money?

Post by anon_investor »

soxfan10 wrote: Sun Nov 22, 2020 8:35 am
Miriam2 wrote: Sun Nov 22, 2020 12:17 am
Spirit Rider wrote:
bberris wrote: Receipts are a PITA. I save my summary EOBs at the end of the year, downloaded from the insurance co.
EOBs are not proof of payment.
Spirit Rider - what would you suggest we save to prove the medical bill, that we paid it, and that we were not reimbursed for it?
1 - How do we prove we were "not reimbursed" by any insurance company?
2 - Is there anything else we need to save to show the IRS if they come calling?
I generally save the invoice from the provider with detail showing the insurance company payment - this takes a bit more time than a summary EOB. I do not save proof of payment. If the IRS wants to argue that either: (i) I didnt pay the invoice; or (ii) I had a second insurance payment, they can come at me any time.

The invoice (especially one that shows a credit from an insurer payment) provides a good faith basis to conclude that a withdrawal should be exempt.
I save that plus proof of payment. Which is usually just a PDF of an online CC payment confirmation.
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Re: Do I have too much HSA money?

Post by bberris »

Spirit Rider wrote: Sat Nov 21, 2020 8:03 pm
bberris wrote: Sat Nov 21, 2020 9:04 am Receipts are a PITA. I save my summary EOBs at the end of the year, downloaded from the insurance co.
EOBs are not proof of payment.
I'll throw myself at the tender mercies of the IRS. I'd have to lose a trifecta:
1. I get audited.
2. The IRS takes the bizarre position that I did not pay what I owe. (Where are the defaults in my credit file?)
3. I can't find proof of payment from credit cards and bill-pay.
523HRR
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Re: Do I have too much HSA money?

Post by 523HRR »

anon_investor wrote: Sat Nov 21, 2020 6:12 pm
523HRR wrote: Sat Nov 21, 2020 3:54 pm Our combined HSAs are currently $142K. We've been keeping our receipts for many years. Still contributing the annual max. Age 57/60.
Curious, how much your receipts are worth?
Did a quick check. Receipts total right at about $100K.
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Re: Do I have too much HSA money?

Post by anon_investor »

523HRR wrote: Tue Nov 24, 2020 2:51 pm
anon_investor wrote: Sat Nov 21, 2020 6:12 pm
523HRR wrote: Sat Nov 21, 2020 3:54 pm Our combined HSAs are currently $142K. We've been keeping our receipts for many years. Still contributing the annual max. Age 57/60.
Curious, how much your receipts are worth?
Did a quick check. Receipts total right at about $100K.
Wow that is quite a bit. Definitely makes it seem like keeping the receipts can add up, having access to $100k tax free at any time is quite an emergency fund.
523HRR
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Re: Do I have too much HSA money?

Post by 523HRR »

anon_investor wrote: Tue Nov 24, 2020 3:14 pm
523HRR wrote: Tue Nov 24, 2020 2:51 pm
anon_investor wrote: Sat Nov 21, 2020 6:12 pm
523HRR wrote: Sat Nov 21, 2020 3:54 pm Our combined HSAs are currently $142K. We've been keeping our receipts for many years. Still contributing the annual max. Age 57/60.
Curious, how much your receipts are worth?
Did a quick check. Receipts total right at about $100K.
Wow that is quite a bit. Definitely makes it seem like keeping the receipts can add up, having access to $100k tax free at any time is quite an emergency fund.
Wife had breast cancer several years ago; all good now. Even with decent insurance, it was still a lot out-of-pocket. Ongoing treatments continue to hit the deductible pretty hard.
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Re: Do I have too much HSA money?

Post by willthrill81 »

Until you are on track to have enough HSA funds to have a very good chance of covering all of your future medical expenses, there's virtually no way that you have 'too much'. And unless you get really lucky with stock picking, it's very difficult to get into that position.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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anon_investor
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Re: Do I have too much HSA money?

Post by anon_investor »

523HRR wrote: Tue Nov 24, 2020 3:29 pm
anon_investor wrote: Tue Nov 24, 2020 3:14 pm
523HRR wrote: Tue Nov 24, 2020 2:51 pm
anon_investor wrote: Sat Nov 21, 2020 6:12 pm
523HRR wrote: Sat Nov 21, 2020 3:54 pm Our combined HSAs are currently $142K. We've been keeping our receipts for many years. Still contributing the annual max. Age 57/60.
Curious, how much your receipts are worth?
Did a quick check. Receipts total right at about $100K.
Wow that is quite a bit. Definitely makes it seem like keeping the receipts can add up, having access to $100k tax free at any time is quite an emergency fund.
Wife had breast cancer several years ago; all good now. Even with decent insurance, it was still a lot out-of-pocket. Ongoing treatments continue to hit the deductible pretty hard.
Glad to hear she's okay now. I assumed there must have been a major medical event. I only started investing HSA aggressively last year with about $18k now. We have $8k in receipts but only because we had a baby this year, otherwise I expect our annual medical expenses to be only in the hundreds of dollars.
bg5
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Re: Do I have too much HSA money?

Post by bg5 »

Question

How long can you keep receipts from? Are you saying I can keep receipts for 20 years and then take my HSA cash out tax free?????

Is there a limit for how long these receipts can go back?
02nz
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Re: Do I have too much HSA money?

Post by 02nz »

bg5 wrote: Tue Nov 24, 2020 8:12 pm Question

How long can you keep receipts from? Are you saying I can keep receipts for 20 years and then take my HSA cash out tax free?????

Is there a limit for how long these receipts can go back?
No time limit. But I'd advise scanning (or taking a picture) if you plan to keep them a long time, as paper receipts will fade (especially the ones printed on thermal paper, e.g. store receipts).
bg5
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Re: Do I have too much HSA money?

Post by bg5 »

Wow.... so this is like another Roth IRA. I didn’t realize that. Glad I’m putting in full $7200 this year and will continue to Max it out 👍
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Re: Do I have too much HSA money?

Post by willthrill81 »

bg5 wrote: Tue Nov 24, 2020 8:22 pm Wow.... so this is like another Roth IRA. I didn’t realize that. Glad I’m putting in full $7200 this year and will continue to Max it out 👍
It's better than a Roth IRA because the money going in was not taxed (at least at the federal level; most states don't tax HSA contributions either).

The limit on HSA contributions is $7,100 this year. The limit will be increased to $7,200 for 2021.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
bg5
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Re: Do I have too much HSA money?

Post by bg5 »

Love it 😎💪👍

Now I just need to figure out a way to buy Bitcoin with my HSA 😂😎
Spirit Rider
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Re: Do I have too much HSA money?

Post by Spirit Rider »

bg5 wrote: Tue Nov 24, 2020 8:12 pm Question

How long can you keep receipts from? Are you saying I can keep receipts for 20 years and then take my HSA cash out tax free?????

Is there a limit for how long these receipts can go back?
There is no time limit.
nolesrule
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Re: Do I have too much HSA money?

Post by nolesrule »

The time limit is before you and/or your spouse beneficiary die.
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Re: Do I have too much HSA money?

Post by willthrill81 »

nolesrule wrote: Wed Nov 25, 2020 3:43 pm The time limit is before you and/or your spouse beneficiary die.
True. So if you're planning on leaving your HSA to a non-spousal beneficiary, you should probably get reimbursed before both of you pass away. Otherwise, your non-spousal beneficiary will have to treat the unreimbursed expense as taxable income.

But if you choose to leave your HSA to a charity instead, then you can hang on to receipts as long as you want, including never getting reimbursed. We're planning to do this because HSAs are so bad to inherit from a non-spouse from a tax perspective, and we'll almost certainly be leaving a lot of other assets to our daughter anyway.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
Glockenspiel
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Re: Do I have too much HSA money?

Post by Glockenspiel »

I have $47k in my HSA at age 35, and will likely continue to max it out every year until retirement (~20 more years).
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Re: Do I have too much HSA money?

Post by michaeljc70 »

As has been pointed out the biggest risk of having too much in an HSA is the bad tax consequences of an inherited HSA. Even if you have a spouse, some studies found that within three months after one spouse dies, the chance that the other will follow is anywhere from 30 to 90 percent. So, they aren't always going to be able to use the HSA before passing themselves.
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Re: Do I have too much HSA money?

Post by playtothebeat »

I have ~$60k at age 34 and plan to keep it going for as long as possible.
Figure even if we never use it and ultimately pass it on to our son, no matter the tax consequences, it's still inheritance he wasn't counting on (and hopefully, whatever that amount is, it's insignificant relative to other assets/funds he will hopefully be receiving)
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Re: Do I have too much HSA money?

Post by willthrill81 »

playtothebeat wrote: Wed Nov 25, 2020 7:05 pm I have ~$60k at age 34 and plan to keep it going for as long as possible.
Figure even if we never use it and ultimately pass it on to our son, no matter the tax consequences, it's still inheritance he wasn't counting on (and hopefully, whatever that amount is, it's insignificant relative to other assets/funds he will hopefully be receiving)
As I noted above, if you want to leave behind something to charity, an HSA is the best account for that purpose due to its very unfavorable tax treatment for heirs.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
checkyourmath
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Re: Do I have too much HSA money?

Post by checkyourmath »

Never enough....HSA is more important than your Roth and 401k after matching portion. I will max my HSA until the day I die.
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anon_investor
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Re: Do I have too much HSA money?

Post by anon_investor »

checkyourmath wrote: Wed Nov 25, 2020 7:19 pm Never enough....HSA is more important than your Roth and 401k after matching portion. I will max my HSA until the day I die.
So you plan to die before 65? With some rare exceptions you can't contribute to an HSA once you start medicare...
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Re: Do I have too much HSA money?

Post by manatee2005 »

eukonomos wrote: Sat Nov 14, 2020 8:32 am
stocknoob4111 wrote: Fri Nov 13, 2020 9:39 pm ... There is NO such thing as too much in HSA, HSA is the best account in terms of tax advantages.
Until you die.

I agree HSA's are great, but your heir would rather get 100K$ as a tIRA than an HSA. Better to spread out their tax burden.

If you max out 2 HSA's for another 30 years, with decent growth, I think you might then have a reasonable question about having too much in them.

No reason not to keep adding to them for now and keeping good records. Just be aware.
Something tells me I won't really care after that happens.
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