My HSA is set up as two separate accounts: a checking account and investment account. I keep roughly $3000 in the checking account at most times just to cover any major health expenses that may show up unexpectedly. The number is arbitrary, but it feels right for us. The rest goes in the investment account and it’s 100% vanguard total stock market index for me. I’ll periodically shift money into the investment account as the checking account grows.
This sounds like a solid strategy to me. Is this pretty common functionality across HSA providers, or specific to whoever you use? I guess what I’m asking is when it comes time to use the money, you can specifically choose to withdraw from the “checking account” portion?
Also, for those of you saying it’s really just emergency money, are you all paying out of pocket for regular doctor visits, routine procedures? And, if so, are you saving receipts to reimburse yourself later with HSA funds?
Honestly, this seems like a hassle with a negligible benefit, so I usually pay most expenses from my HSA debit card. I’d rather spend pre-tax dollars from my HSA now and save my post-tax dollars. I max out my HSA yearly and never come anywhere close to spending it down, so it’s going to be plenty big enough to cover my future health expenses.
Not sure, honestly. The default setup is the checking account with a debit card, I’m pretty sure. I had to teach a certain threshold in that account before I could open the investment account up. No idea if that’s normal.
I think this part is definitely common across providers, in my experience at least. I’ll be curious to see if mine handles multiple segments of money similar to yours, as I like that strategy of having essentially a nest egg for common expenditures and letting the rest just accrue interest.
Got a tax question on Backdoor Roth. I had a $0 balance IRA to start 2019. I contributed $6,000 to my IRA around Dec 28. The problem is that the funds were not able to convert to a Roth until Jan 2020. Around Jan 5 I converted all 6,000 to a Roth. does that screw anything up as far as what I may owe on the conversion. The pro rata rule confuses me and I can’t tell if by doing the conversion in a different year than the contribution I screwed something up
That 6000 was a nondeductible IRA contribution right? You aren’t planning/able to deduct it from your 2019 tax return right? If so, you’re fine. Pro Rata rule applies when you have deductible IRa contributions that you’ve previously claimed on a tax return.
December 4th, 2019 is when I begged & pleaded with the board to buy in. December 14th, 2019 is when I posted the second time and acknowledged that people on this forum hate succeeding. Below is what I paid for my shares. In all honesty I can't really blame people for not listening to someone who has been investing for two months.
Great call. What was it specifically you saw in your technical analysis that alerted you to make this trade.
Just as an FYI, the $80 was before the fires. PCG is going through a bankruptcy. I highly doubt the vast majority of people in this thread are capable of giving an intelligent opinion on a utility going through a bankruptcy dealing with the uncertainty of California’s regulatory environment and potential unknown liabilities.
Converting a nondeductible ira to a Roth isn’t a taxable event, so it doesn’t matter when you do it honestly. Just make sure your cpa knows the details or if you do your own taxes that you fill the forms out correctly. There are tutorials online that explain how to fill out the tax forms.
Did Trump leverage the recent years of economic success by building up the national debt which is inevitably going to cause an economic downturn by necessitating raised interest rates?
basically everything every debt hawk ever said has turned out to be completely untrue but no to the question, but yes to the economy is juiced with loose money from the government
I haven’t used fundrise, but I do invest in private real estate (and a couple other asset classes) with a syndicated equity investment firm. I also used to work for a firm that syndicated private equity in a niche sector of multi-family housing. My best couple pieces of advice: - Invest with someone who is also putting their own money in deals; if their only role is to generate fees by aggregating everyone else’s capital without their “skin in the game” their deal quality will inevitably decline. Seems self-explanatory. - Have a sense of the asset types, sectors and markets in which you are investing. Sticking to multi-family housing...Austin is a hot apartment rental market right now, but not every deal in Austin is going to return big. Is it an acquisition or a new development? What’s the age of the asset? Rental rates relative to market? Product type? Is repositioning required? Reputation of the property manager? You’ve got to do your own diligence and not just trust what’s put in front of you. All of that said, my understanding is that Fundrise does not require one to be an accredited investor to join and has relatively low buy-in. That’s definitely attractive if the fees are reasonable and you’re confident in doing your own diligence on investment opportunities.
Almost certain you don’t have to be accredited. I think that’s sort of the point, to give them a way to enter the market. Great advice though, esp about really checking out the deals.
Can anyone give me a reason that wife and I shouldn't just treat our HSA like another tax shelter investment fund? We can cash flow our medical expenses now while having the HSA grow through mutual fund allocations so that we've got a good chunk ready when we're old and dying.
This is probably best. Are you going to save receipts? I don’t want to hassle with saving receipts. HSA is also a horrible account to leave to your heirs, so there’s no point in letting it get too massive. That’s why I tend to still mostly use it to pay for small dr bills here and there, mostly for simplicity because I don’t want to save receipts. If you actually run the numbers, it’s a fairly negligible difference between spending HSA funds and saving your cash in a taxable acct vs spending cash and not touching HSA, especially if you’re in a high tax bracket. I think people spend too much time worrying about it, honestly. The behavioral component is probably the most important. If you’re spending HSA funds AND not saving cash in a taxable, then you will certainly have less in retirement.
Wife loves saving receipts. And I don't imagine it'll get too substantial given that I'll be turning 39 next month. Twenty five more years contributing $6,000 + $1,000 per year with 10% growth makes me think we'll have somewhere in the $200,000-$250,000 range for medical expenses in retirement (I'll have medical benefits through my pension but there's still a monthly expense.)
With Medicare kicking in at 65, you probably don’t need anywhere close to $250k for medical expenses at that point. $150k should be plenty, based on the current system. Also, keep in mind receipts are going to fade over time, so hopefully she’s scanning them and logging the years. Also, be prepared for an audit if you ever do use old receipts to reimburse yourself. It’s a pretty common irs audit issue.
Label me a tinfoil hat wearing lunatic, but I'm not expecting any current government entitlement system to contribute to our retirement. It'll all be icing on the cake. That said, if SS and medicare actually do kick in, I'll just take the hit on withdrawing for non-reimbursed expenses from the HSA.
That’s a great perspective. Saving too much is an awesome problem to have in retirement. I’m just nitpicking.
This is the approach I'm taking for retirement planning. I don't expect medicare or SS, at least in anything resembling their current form, to be around when I'm ready to retire. Planning to get nothing and anything will just be gravy.
Have you had this conversation with your parent(s) when they say, "but what do you mean that it won't be around... you paid into it, it's your money." Oh mom, my sweet summer child...