Pay Even Less in Taxes in 2018!
Joe Luscavage
"Hope is an expensive commodity. It makes better sense to be prepared." -Thucydides
HSA rules will not be effected by tax reform!
The pending passage of the ‘2017 Tax Cuts and Jobs Act’ will be the first overhaul of the U.S. Tax Code in 31 years. As advertised it is expected that most American’s will effectively see pay increases in 2018. No changes to Health Savings Accounts (HSA) were included in the legislation.
What does this mean to me? Those covered by Qualified High Deductible Health Plan (QHDHP) may want to take some of those additional dollars and save for future medical expenses, tax free. Yes, the HSA is still a triple win: Not taxed on contributions (IRS limit for 2018 are $3,450 single, and $6,900 per family), Interest earned is not taxed and distributions from your HSA for medical expenses (in accordance with IRC section 213(d)) are not taxable either. There are catchup provisions for contributors over the age of 55 and once you retire (you will discontinue contributions once covered by Medicare) existing HSA savings can be used to cover the numerous gaps in Medicare coverage on a tax preferred basis. Why pay tax for post-retirement medical expenses like glasses, hearing aids, copays, deductibles, Rx donut holes with post tax distributions from your 401(k) or other retirement income? Use that money to fund your retirement!
Follow this link to read our article in Plan Consultant Magazine about strategies to combine your 401(k) and HSA into tax preferred vehicles that benefit you. Want us to help you with your benefits and retirement call Tycor today, someone will always answer the phone!
Joe Luscavage is Vice President of Employee Benefit Services for Tycor Benefit Administrators in Berwyn, PA. Tycor, established in 1980 Tycor provides benefit advisory services to employers of all sizes in Pennsylvania. Give your second largest payroll expense the attention it deserves. Call today 610.251.0670.
Nothing in this article is intended to cover all requirements of compliance but acts as an overview. Nothing Contained herein is intended to be legal or tax advice. Please consult your independent legal & tax advisors for questions specific to you, your plan or policy.