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A Health Savings Account(HSA) can be used for all qualified medical expenses. To qualify for an HSA, the individual must:
Have a High Deductible Health Plan (HDHP)
Not be enrolled in Medicare
Not be claimed as a dependent on tax return
The contributions toward an HSA are tax deductible and tax free for all qualified distributions. You can also fund your HSA once in your lifetime from your Traditional IRA up to the maximum contribution limit for that year.
2020 and 2021 Contribution Limits:
Single – $3,550 for 2020 and $3,600 for 2021
Family – $7,100 for 2020 and $7,200 for 2021
$1,000 catch-up (Age 55+)
Check out this video on how you can pay today’s health expenses tax-free with an HSA
Answers to some of the most frequently asked investing questions (FAQs) about HSA IRAs
What in an HSA?
An HSA is a type of savings account designed to help you set aside money to pay for qualified medical expenses tax-free.
What does HSA stand for?
Health Savings Account
Can I buy real estate with an HSA?
“Buying real estate with an IRA or a solo 401k certainly can be done! You just need to find a custodian that will hold non-traditional or ‘alternative’ investments.”
Can I use an HSA to buy a house?
“You can use an HSA to buy a house.”
How do I use an HSA to buy a house?
“You first need to find a custodian that will hold non-traditional or ‘alternative’ investments and establish an IRA with them. You will then locate the house you want to purchase, and typically, your custodian will require you to sign some internal forms. After making sure the contract is in the name of the IRA, your custodian will purchase the property for you on behalf of your IRA.”
What is the difference between an HSA and an IRA?
Health Savings Accounts and IRAs are both tax advantaged accounts. HSA distributions are designed to help you with tax-free medical expenses, whereas tax-deferred distributions from the Traditional IRA can be more general.
How do you set up a self-directed HSA?
“You will first need to find the custodian you like! Once you have picked a good custodian, you will complete some paperwork (typically an application) and in a few days, your account will be open. *Processes will vary by custodian.”