AFTER YOUR EMPLOYEES CONTRIBUTE UP TO THE EMPLOYER MATCH AMOUNT IN THEIR 401 ( k ), ENCOURAGE THEM TO FUNNEL ADDITIONAL AVAILABLE RETIREMENT FUNDS
INTO THEIR HSA BEFORE PUTTING MORE INTO THEIR 401 ( k ).
HSAs
All employers would like to offer the “ latest and greatest ” benefits to their employees to help stay competitive and retain key personnel . There ’ s no doubt that a strong benefits plan can be critically important for employees choosing between multiple employment offers . Here is where your Health Savings Account can come into play to help lock down that critical employee .
Sad to say , the days of lavish pensions are largely gone . Only those few lucky teachers , government workers and old-time corporate employees may still qualify . For everyone else , employers must take the lead on formulating strategies to help employees save for retirement without relying too heavily on the generosity of Uncle Sam .
AFTER YOUR EMPLOYEES CONTRIBUTE UP TO THE EMPLOYER MATCH AMOUNT IN THEIR 401 ( k ), ENCOURAGE THEM TO FUNNEL ADDITIONAL AVAILABLE RETIREMENT FUNDS
INTO THEIR HSA BEFORE PUTTING MORE INTO THEIR 401 ( k ).
Companies of any size can offer this benefit , which allows participating employees to save and invest tax-deferred income . Often , the funds contributed by the employee are matched by the employer up to a certain percentage .
But popular 401 ( k ) plans are often not the only game in town . Employees that contribute to Health Savings Accounts ( HSAs ), offered in conjunction with high-deductible medical plans , can also defer taxes on their contributions . Both 401 ( k ) plans and HSAs can provide matching funds to encourage employee contributions and savings . Both assess penalties for early withdrawals while normal tax rates apply to any ageappropriate withdrawals .
The key advantage of HSAs-and it ’ s a big one-is that employees can always use the money from their HSAs for qualified medical , dental and vision expenses without paying the government a dime . In addition , after age sixty-five if they want to use the HSA funds to take a family cruise around the Mediterranean they aren ’ t penalized , they just pay ordinary income tax .
Here ’ s what Bill Barclay , Employee Benefits Advisor at Marcotte , recommends to his company ’ s own employees in planning their retirement accounts : “ If your company offers a 401 ( k ) plan with a percentage match , be sure to invest up to the employer match amount in this account first . So if your company ’ s matching rate is three percent , that is the minimum that you should be contributing .”
Then , Bill recommends that people do the same with their HSAs : “ HSAs can also receive matching employer funds for medical and related expenses , so be sure to take advantage of this entire contribution too .” Only after both funds are receiving this “ free money ” from their employer should employees turn back to the 401 ( k ) account to further increase contributions . “ Our point ,” says Bill , “ is for people to stop thinking of an HSA as part of your health plan and start thinking of it as part of your retirement plan . These are the greatest play in the IRS tax code to begin to accumulate savings .”
There is never a perfect time to begin saving , so Bill recommends encouraging employees to start early to accumulate the greatest capital appreciation possible . “ If they can manage to put aside five percent of every paycheck starting from the age of twenty-five or thirty ,” Bill notes , “ by the time they reach fifty-five , chances are they will be well on their way toward a comfortable retirement .”
An annual survey conducted by America ’ s Health Insurance Plans ( AHIP ) shows that enrollment in HSAs with high-deductible health plans totaled approximately 20.2 million individuals as of January 2016 , a
HSAs
Offer Employees A Slew Of Benefits
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