Potential for 401K match to be directed to other accounts

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anhonymous
Posts: 72
Joined: Sat Jan 05, 2019 10:41 am

Potential for 401K match to be directed to other accounts

Post by anhonymous »

Hello everyone:

I just read a private IRS ruling to a taxpayer company that they may have ability to direct Company match on 401K to other avenues such as student debt, HRA or HSA. See below link. First I am hearing of this option even.
https://www.irs.gov/pub/irs-wd/202434006.pdf
To keep this from getting blocked and actionable — would it not be better then to put the match into HSA since that can grow tax free? This assumes you don’t have a need for those money in other debt clearing situations. What am I missing?
sailaway
Posts: 9151
Joined: Fri May 12, 2017 1:11 pm

Re: Potential for 401K match to be directed to other accounts

Post by sailaway »

Only if you cannot otherwise max the HSA (even if you end up withdrawing to pay medical bills). If you can max the HSA, redirecting the match would artificially limit the amount of tax sheltered space you have available.
the_wiki
Posts: 3898
Joined: Thu Jul 28, 2022 11:14 am

Re: Potential for 401K match to be directed to other accounts

Post by the_wiki »

Using the HSA you risk having to spend that match before retirement on healthcare.
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