Even though December 31st has passed, there are still opportunities to do some last minute tax planning. Personal finance expert Megan Gorman finds that one of the best ways is to make sure your HSA is fully funded and invested by April 15th.
“Just like with IRAs, we see the biggest rush when they have had their taxes completed,” says Anna Kissick, Director of HSA Business Development at Liberty Savings Bank. “Their tax accountant has that discussion about what are additional things a consumer can do to save on taxes and they invariably talk about how much more they can contribute to maximize their tax deduction.”
For individuals who find themselves in this position, there are a couple of ways to address it. First, you need to determine if you actually have an HSA account. Often times, employers open them for you with your HSA compatible health care plan. But if it is simply a matter of not fully maxing out your HSA, contact your plan administrator to find out where you can send a check to add to the balance. Further, make sure you ask how you should code it to be seen as a 2019 contribution which will allow you to take the above-the-line deduction when you file your return this year.Further, it is important to not shrug off the opportunity to add to an HSA, even if the amount you can to the account is small.
That is a daunting amount to save – and that assumes you stay in good to average health in retirement. But that is where the magic of HSAs can help. Once you fund the account, you should take the next step and invest the funds. The combined power of tax deferred compound growth and investment returns can get you closer to the key amount needed for retiree medical expenses.Morningstar’s 2019 Rankings of HSAsIt is important to remember when investing in an HSA that you have a long-term horizon.
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