HSA accounts are one of the last bastions of 1) truly tax deductible contributions, 2) tax exempt withdrawals all while paired with 3) tax free growth.
If you’ve maxed out your 401k, SEP, i401k, IRA, etc., and you have a high deductible health care plan (ask your HR department about this), you may want to open and contribute to an HSA. We happen to recommend Fidelity’s HSA account due to its zero cost and the ability to buy cheap index ETFs like Vanguard’s S&P 500 ETF “VOO” without any commission.
HSA accounts do not need to be used by year-end like FSA accounts, and, if you don’t ever access the funds through your working years, when you turn 65, you can still withdraw those funds tax free and use them to pay any Medicare monthly premiums or medical expenses. The combination of tax deductible contributions, tax exempt growth, and tax exempt withdrawals all come with no income caps at all. In other words, whether you’re making $100k or $2mm a year, as long as you have a high deductible health care plan, you can contribute up to $4300 if an individual, or $8550 if a family. In addition to those caps, for those who are 55 or older, there is a $1000 “catchup” provision enabling you to contribute up to $5300 or $9550 for 2025.
If you have the liquidity, we highly recommend you contribute. Simply through the act of moving money from one “pocket” to another (from your investment account to your HSA) you can take a great deduction.
