Todd Pouliot, AIF
Gateway Financial, LLC
www.mygatewaymoney.com
Tpouliot@mygatewaymoney.com
844-592-9888

“Hello there, financial enthusiasts! Welcome back to My Gateway Money the go-to place for all things money-related. Today, we’ve got an exciting topic to dive into – Health Savings Accounts, or HSAs, and why they might just be the superior choice compared to traditional retirement savings vehicles like 401(k)s and IRAs. Before we get started, don’t forget to hit that subscribe button and ring the notification bell to stay updated on our latest content. Now, let’s jump right in!”
Before I get to the 5 ways an HSA trumps 401(k)s and IRA
A very brief overview
Qualified: Qualified medical care expenses must be for products or services designed to alleviate or prevent a condition or illness. So, any product or service billed by a doctor/hospital/urgent care, optometrist, chiropractor, or dental clinic (excluding cosmetics) including copays for those visits are all qualified. Also qualified are prescription medication and products like contacts, hearing aids, and more.
[Reason #1: Unique Triple Tax Advantage]
“One of the standout features of HSAs is their triple tax advantage. Contributions are made with pre-tax dollars, meaning you get an immediate tax break. Then, any growth within the account is tax-free, and withdrawals for qualified medical expenses are also tax-free. No other retirement savings option offers this trifecta of tax advantages.”
Not Traditional nor Roth 401(k) or IRA do this. It’s pay me now or pay me later, and at what tax rate
[Reason #2: Flexibility of Withdrawals]
“Unlike 401(k)s and traditional IRAs, HSAs offer unparalleled flexibility when it comes to withdrawals. While 401(k)s and IRAs penalize early withdrawals before age 59½, HSAs allow penalty-free withdrawals for qualified medical expenses at any age. This flexibility makes HSAs a powerful tool not only for retirement but also for managing healthcare costs throughout your life.”
Bonus (Emergency or Cash access fund)

[Reason 3: No Required Minimum Distributions (RMDs)]
“Another compelling reason to consider HSAs is the absence of Required Minimum Distributions, or RMDs. With 401(k)s and traditional IRAs, the government mandates that you start taking withdrawals at a certain age, whether you need the money or not. HSAs, on the other hand, have no such requirement, allowing your money to continue growing tax-free for as long as you like.”

[Reason 4: Dual Purpose – Health and Wealth]
“What makes HSAs truly unique is their dual purpose – not only as a retirement savings vehicle but also as a tool for managing healthcare expenses. You can use HSA funds to pay for qualified medical expenses today while saving for the future. This flexibility can be especially beneficial when unexpected healthcare costs arise.”

[Reason 5: Portability]
“HSAs are also incredibly portable. They are not tied to your employer, giving you the freedom to keep your HSA account even if you change jobs. This contrasts with 401(k)s, which may be subject to rollovers or conversion into an IRA when switching employers.”

“In conclusion, Health Savings Accounts bring a unique set of advantages to the table that can make them a superior choice for many individuals. The triple tax advantage, flexibility of withdrawals, exemption from RMDs, dual-purpose functionality, and portability make HSAs a compelling option to consider alongside or even instead of traditional 401(k)s and IRAs. As always, it’s essential to consult with a financial advisor to determine the best strategy based on your individual circumstances.”

“Thank you for joining us today on My Gateway Money. If you found this video helpful, don’t forget to give it a thumbs up, share it with your friends, and leave your thoughts in the comments below. Until next time, stay financially savvy!”

Again advice is personal so make sure you seek professional help preferably from a Fee-Only Financial Planner.

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Unlocking financial freedom is a goal for many individuals, and finding the right tools and accounts to help achieve this goal is crucial. Health Savings Accounts (HSAs) are often overlooked when it comes to retirement planning, but they actually offer several advantages that make them stand out when compared to 401(k)s and IRAs. Here are five ways why HSAs trump 401(k)s and IRAs when it comes to unlocking financial freedom.

1. Tax advantages
One of the biggest advantages of HSAs is their triple tax advantage. Contributions to an HSA are tax-deductible, the funds in the account can be invested and grow tax-free, and withdrawals for qualified medical expenses are also tax-free. This triple tax advantage makes HSAs incredibly attractive for individuals looking to maximize their retirement savings while minimizing taxes.

In comparison, both 401(k)s and traditional IRAs offer tax-deferred growth, meaning contributions are made with pre-tax dollars and the funds grow tax-free until withdrawn. Roth IRAs offer tax-free growth, but contributions are made with after-tax dollars. While these accounts still offer tax advantages, the triple tax advantage of HSAs is unrivaled.

2. Flexibility
HSAs offer unparalleled flexibility when it comes to withdrawals. While 401(k)s and traditional IRAs have strict rules and penalties for early withdrawals, HSAs can be used for any qualified medical expense at any time, with no penalties. This means that the funds in an HSA can be used for healthcare costs throughout retirement, providing a valuable safety net for unexpected medical expenses.

3. No Required Minimum Distributions (RMDs)
Unlike 401(k)s and traditional IRAs, HSAs do not have required minimum distributions (RMDs). This means that funds in an HSA can continue to grow tax-free without the need to withdraw a certain amount each year. This can be incredibly beneficial for individuals who do not need the funds for medical expenses and want to leave the money to grow for as long as possible.

4. Portability
HSAs are also highly portable, meaning that the account can be transferred from one employer to another, and even retained if an individual becomes unemployed or changes health insurance plans. This flexibility allows individuals to maintain control of their HSA funds and continue to grow their savings over time, regardless of changes in employment or health coverage.

5. Retirement healthcare costs
Finally, HSAs are uniquely positioned to help individuals save for healthcare costs in retirement. With healthcare expenses expected to rise significantly as individuals age, having a dedicated account like an HSA can help mitigate the financial burden of medical care in retirement. This can provide peace of mind and financial security for individuals as they plan for their retirement years.

In conclusion, Health Savings Accounts offer several advantages that make them a superior option for individuals looking to unlock financial freedom. With their triple tax advantage, flexibility, lack of RMDs, portability, and focus on retirement healthcare costs, HSAs stand out as a valuable tool for retirement planning. By understanding the unique benefits of HSAs and incorporating them into their financial plan, individuals can take significant steps toward achieving their long-term financial goals and securing a comfortable retirement.