You Can Still Make Prior-Year Contributions and Maximize Your HSA!
Did you maximize your HSA for 2021? 2021 contribution limits were $3,600 for individuals and $7,200 for families. If you didn’t make the maximum contributions to your HSA last year, there is still time! You can make prior-year HSA contributions for 2021 up until April 18, 2022.
Believe us, it’s worth it!
If you have the means to make maximum yearly contributions to your HSA, you’re setting yourself up for massive tax-free growth.
Triple Tax Advantage
Remember, HSAs allow for tax-free contributions, growth, and withdrawals for qualified medical expenses.
Excellent Retirement Vehicle
An HSA is a great safety net for unforeseen medical expenses. However, thanks to tax-free growth, if you can avoid dipping into your HSA funds and pay for your medical expenses out-of-pocket instead, you’ll be on your way to building a sturdy retirement fund. Once an HSA holder reaches the age of 65, funds can be used on non-medical expenses (they are simply subject to regular taxation at that point).
An HSA’s ability to grow tax-free should certainly be taken advantage of. HSA funds don’t incur taxes on interest or gains. Invest your HSA savings in mutual funds, stocks, or bonds to gain tax-free wealth. (Of course, it is always wise to set aside some funds for short-term, unanticipated healthcare costs.) Investing in your HSA not only produces rapid growth but better growth. When your money sits in a bank account you may receive 1 or 2% interest, but when you utilize the investment funds that, for example, MotivHealth grants access to, your savings can grow exponentially. View MotivHealth investment options here.
Maximizing Your HSA Contributions Means Maximizing Your Future
Even if you can’t afford the maximums, it’s important that you contribute to your HSA every year. If you’re married, split your HSA into two accounts. You’ll still be limited to the maximum annual family contribution, but each spouse can make an annual $1,000 catch-up contribution once they reach age 55. If you haven’t started maximizing your HSA, it’s not too late. You can start contributing at age 50 and still build quite a nest egg because those are your peak earning years. (Be aware that enrolling in Medicare makes it so that you can’t contribute to your HSA anymore.)
P.S. Prior-Year HSA Contributions Could Give You a Little Tax Break!
Making an additional contribution to your previous year’s HSA could help reduce the amount of federal tax you owe. Contributions you make directly to your HSA are eligible for federal tax deductions.
Time is ticking! Go fund your HSA!