About Magazines Covington to Madison - May 2017 | Page 13

I n our continuing series regarding to a Vanguard S&P 500 Index Fund within retirement planning and how best the account, your HSA can be used to build to prepare for this goal, last month a significant balance to use at any future we began to explore the individual time for health care cos t, both pre- and post- investment vehicles that can be used to retirement. solidify your overall plan. This month we will analyze what is probably the most powerful, Deductible Health Insurance Plan qualifies, yet possibly the most overlooked, manner to a family can contribute up to $6,750 to the help you plan for this goal. account and an individual can contribute up For the year 2017, provided your High This particular vehicle is called a to $3,400 (or $7,750 and $4,400, respectively, Health Savings Account, or HSA, and if you if the account holder is 55 or older). Because have access to a qualifying High Deductible our income tax system is set up on a marginal Health Insurance Plan, you can begin to tax basis, the contributions give you the take advantage of an HSA at most any time. largest tax break possible since it lowers your It takes some pre-planning to make sure Adjusted Gross Income and removes this you have everything in place to begin your amount from your highest segment of taxable contributions, but when in place, you can income. contribute throughout the year. This type of account is totally separate from a company of a Roth IRA, tax free earnings, and a 401k or sponsored Flexible Spending Account, and 403b account, current income tax reduction, will offer more flexibility and opportunity for into one specific savings/investment vehicle. growth. Also, if the funds end up being needed later in The key aspects of the HSA are the An HSA combines the best features life for expenses other than health care, after fact that the account combines a significant attaining age 65, the distributions will be taxed reduction in your current income tax liability similar to other retirement assets and without with tax-free, long-term growth, provided the penalties. account funds are used for future health care cost. In addition, unlike a Flexible Spending know if you have a qualifying plan available, Account, it does not have the “use-it-or-lose- and it is possible you may already be enrolled it” feature. Due to this major difference, the in such a plan. Reagan Financial Planning, account can act as a long-term investment LLC can also assist you in determining if a account for any portion of your contribution, HSA makes sense with your current health versus a short-term account where a portion insurance planning and approach to tax of your contribution is lost if not used by a savings strategies. Your human resources manager will specific date. By using an investment similar “YOUR FINANCIAL SUCCESS IS OUR PASSION” PLEASE CONTACT MARK FOR MORE INFORMATION, AND TO ALSO INQUIRE ABOUT OUR ONE-HOUR COMPLIMENTARY CONSULTATION AND A 1 YEAR COMPLIMENTARY SUBSCRIPTION TO “KIPLINGER’S PERSONAL FINANCE” MAGAZINE. 770.658.9440 - [email protected] - WWW.REAGANFINANCIALPLANNING.COM STATE OF GEORGIA REGISTERED INVESTMENT ADVISOR A B OU T M A G A Z I N ES COV I N G T ON T O M A D I S O N · M A Y 2 017 13