Real life hack to this is to pay for medical stuff out of pocket but save receipts. There is no time limit to claim reimbursements.
My HSA has a scan receipt function that ties the receipt to the claim.. I’m sure it’ll be defunct before I need to pull out the money but if the company goes under I can export it all to excel including the images. Kinda putting my eggs in that basket.
Already do but I imagine it's still going to be a lot to remember and chase down when the time comes.
Saving receipts and dealing with the IRS later is simply a step too far for me for a marginal difference overall. Plus I’ve already got $40k in my HSA and I’m 38 and hardly use it. But I’m impressed by those that are willing to take advantage of that loophole.
Let’s say you have $1000 medical bill. Keep the $1000 in the HSA to grow tax free for however long you want and use post-tax dollars to pay for it now. Then reimburse yourself from the HSA down the road while the $1000 has had time to grow. It’s really not THAT big of an advantage if you compare it to sticking the $1000 dollars in a taxable account instead. But it’s something.
No capital gains tax (or marginal income tax, if you were to put it in a IRA/401k) is a pretty massive advantage, relatively speaking. It's not going to put you in a different socioeconomic group or shortcut your retirement by a bunch of years, but it's one of the few avenues an average Joe-type person has to benefit from the current tax system
I agree, you will definitely come out ahead by doing it, assuming the law doesn’t change in the future, and assuming you do a good job of keeping your receipts and don’t mind the extra tax paperwork later on. It just doesn’t move the needle enough for me to do it is all I’m saying. I’ll lazily swipe my HSA card at the doctor and lose out on a couple thousand bucks over my investing lifetime in exchange for simplicity.
I think saving your receipts is overrated in most cases. The selling point of the strategy (beyond the tax savings) is that you're basically guaranteed to have insane medical bills as you age into your 60s/70s/80s, so just use those receipts
I’m not sure I follow. When I have huge medical bills in my 70s, I’ll use my HSA to pay them directly because I won’t have an income stream to pay those bills out of pocket. I might be misunderstanding you here. I was commenting on people who pay medical expenses out of pocket in their 30s but save the receipts for 30 years to reimburse themselves from the HSA when they’re retired.
You won't need the receipts from your 30s because the receipts from your 50s 60s and 70s will likely be enough to exhaust most HSAs
And to be clear, I said "overrated in most cases" Definitely save the $1000 type receipts. I'm talking about ones for a co-pay or your cvs receipt with $27.54 of HSA eligible items. There's a way to do it without going overboard, so I would encourage anyone that has the means to at least try it as an investment vehicle. And you can also choose to use your HSA for some transactions and then your credit card for others.
Ah, gotcha. I think we are on the same page now and I agree. Based on my current HSA balance plus maxing it every year and having it invested 100% in VTSAX leads me to believe that I’ll probably have enough in my HSA to last and then some. Definitely not much value in dying with a big HSA account either. So that’s why I don’t worry about playing the receipt game.
The omnibus bill released early this morning/late last night has a ton of retirement account provisions, including 401(k) auto-enrollment.
Here are some of the high points https://www.nytimes.com/2022/12/20/...ytcore-ios-share&referringSource=articleShare Changes include: -employer requirement to auto enroll employees in 401k -employer permitted to auto enroll employees in emergency savings -certain limited emergency withdrawals permitted from 401k without penalty -student debt can be deemed retirement contributions for purposes of claiming employer 401k match -401k match can be put in as Roth -federal matching contribution to IRA for certain low income individuals -certain part time employee participation in 401k -increased catch up contributions -RMDs delayed until age 73 -Roth 401ks exempted from RMDs -allow tax and penalty-free rollovers from 529 college savings plans to Roth IRAs, with limitations. The lifetime rollover limit is $35,000 and beneficiaries must move funds between a 529 plan and Roth IRA in their name. The 529 account must have been opened for over 15 years.
very specific question but i need to sell multiple whole life policies for a family member i'd never buy something so silly, but does anyone have experience selling them. some have cash values far over the death benefit.
Didn’t we have an entire thread on life insurance? Would imagine some itt could advise. Update- https://www.the-mainboard.com/index.php?threads/do-you-have-life-or-term-life-insurance.183145/
its literally impossible to have cash values higher than a death benefit in a traditional whole life policy unless the contracts are like 40 yrs old irs changed the rules in the 80s when people were using them as tax shelters to get the tax free growth and tax free death benefit, i.e. buying a $100k single pay with a $100k premium death benefit has to grow as cash does to keep a corridor between cash value and death benefit just surrender for the cash value
Is the money needed immediately? You could to a 1035 into an annuity to get some return on it and shield it from taxes. Take withdrawals out each year to spread out the tax hit if it’s a concern. Could also do a max loan against the policy and keep it active so these when they die, there’s no tax liability. Just a couple thoughts as it depends on the situation
i imagine the tax hit will be mostly negligible since it'll just be on the gains as the premium payments will come back out clean and these aren't huge policies just trying to consolidate things so they're easier to manage, cost/benefit of keeping the policies vs surrendering and throwing into a taxable account just isn't sufficient imo. money isn't needed at all.
Got a question for you guys. Got a good Christmas gift from my Dad. He owns his own business and is putting me on salary at 18k per year. He offers 401k to his employees with a max match of 3%. Could I invest 100% of this money into his company’s 401k plan? Is there another route I should go? Intend for it all to be long term savings.
First, do you already have another job with a 401k plan? If so, you can only do the combined total up to $20,500 (2022) or $22,500 (2023). You also need to look in his plan rules. My company only allows 75% of a paycheck to be put into the 401k. Is that your only income? A general recommendation is: 1. 401k up to the match 2. Max HSA if available 3. Max IRA. If the $18k is your only income, I'd do Roth. 4. 401k up to the maximum
I have a full time decent job independent of this deal with my dad. I recently just changed jobs last month, new place has a 401k but no matching. I was thinking max out 401k basically with this deal, then the money from My job I do some sort of IRA. I also have a pre-existing 401k from my old job. And I realize this is stuff I should talk to a financial planner about, just wanted to come here and get some groundwork since I know a lot of guys are knowledgeable and in similar situations. I appreciate the advice.