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2020 Investment Account Contribution Limits

Posted on January 6, 2020July 13, 2020 by Quest Trust Company

If you have a 401k, SEP IRA, simple IRA, or HSA, you’ll be able to contribute more to your account(s) next year, which can help you build your retirement savings! The limit on contributions changes from one year to the next due to inflation. However, the limits don’t change every year, and this year they don’t impact all types of retirement accounts.

How have the contribution limits changed?

The contribution limits have increased slightly for some types of accounts, and they have stayed the same for others.

2020 Investment Account Contribution Limits:

Account	2019 Limit	2020 Limit
Traditional, Roth IRA	$6,000	$6,000
ESA	$2000	$2000
401(k)	$19,000	$19,500
Individual HSA	$3,500	$3,550
Family HSA	$7,000	$7,100
SEP IRA	$56,000	$57,000
Simple IRA	$13,000	$13,500

What will these changes mean for investors?

These changes will mean that investors will be able to put more money aside for the future, which will lead to a potentially larger nest egg.

Furthermore, it will help to reduce the tax burden on the retirement funds of millions of Americans. In fact, these changes have significantly increased the contribution limits for many investment accounts!

What changes can you expect in the future?

The contribution limits are expected to continue increasing in the future due to inflation. The specific amount that contribution limits will increase by depends on the inflation rate at the time as well as other economic factors, which are difficult to predict.

Therefore, it’s important to stay up to date on future changes to investment account contribution limits, which will allow you to make the most of your retirement accounts every year.

Luckily, opening a Quest account can allow you to easily deposit checks into your investment accounts as quickly as possible, and we’ll do it for free within 24-48 hours. Furthermore, our specialists can ensure that you stay up to date on the latest contribution limits. So, open a Quest account today!

How to Pay for Medical & Educational Expenses Tax-Free

Posted on November 22, 2018October 23, 2019 by Quest Trust Company

HSAs, or Health Savings Accounts, and ESAs, or Coverdell Education Savings Accounts, are both ways for consumers to invest in their future by putting money away for a specific purpose. While many people are aware of the existence of these types of accounts, not many consumers know the difference between them or how they differ from a traditional IRA. Here’s everything you need to know about HSAs and ESAs before making an investment.

What is an HSA?

A health savings account is a savings account where consumers can put away money for medical expenses that meet HSA qualifications. This essentially allows them to establish a rainy day fund for moments down the road where they need to cover treatments. However, here are a few factors to keep in mind when considering an HSA —

A high deductible health plan, or HDHP, is required to qualify, and you do not qualify if you use Medicare currently.
The account owner cannot be claimed as a dependent on another person’s independent tax return to have an HSA.
An HSA is self-directed, meaning you can invest just like the other IRA’s.
Unlike an FSA, the HSA is not a “use it or lose it account”. Funds contributed to an ESA continue to exist in the following year if no medical expenses were incurred.
The contributions you make towards your HSA are entirely tax deductible and distributions are TAX-FREE for qualified health expenses.

So, if you are planning on saving for medical care anyway, there are many financial benefits to setting up an HSA.

What is an ESA?

Coverdell Education Savings Accounts (ESAs) are designated savings accounts that you can use to put away money for a beneficiary’s education. Unlike an HSA, an ESA can have multiple contributors, as long as their individual MAGI is less than $110,000, or $220,000 for couples filing together. ESA’s are often mistaken for 529 plans which unlike an ESA, is not self-directed. Also, 529 plans are state specific, where the ESAs are not.

ESAs are a good way for multiple family members to contribute to a child’s future and current education. The funds can be used for both elementary and secondary qualified expenses, like tuition, fees, books, room and board, and more. Even though contributions cannot be made after the beneficiary has turned 18 (unless they have special needs), you can still continue to invest the account and use that money for qualified education expenses until they reach age 30.

Interested in saving money for future health expenses? It’s easy to get started! Contact a Quest specialist today to learn more.

Take advantage of our Last Month Rule Promotion! Open an HSA account with Quest Trust Company by Dec 1st and get your Opening Fees waived.

Click here to Open an Account today!

Five Tips for Health Savings Account (HSA) Holders

Posted on September 14, 2017August 13, 2019 by Juan Deshon

Retirement comes with many perks including a health saving account (HSA). An HSA is a savings account that may be used to offset medical expenses. One of the best things about health savings accounts is the fact that they are tax deductible. Here are five ways to make the most of your account.

1. Invest your HSA earnings

You have full liberality to invest your HSA in the same manner that you distribute funds in your 401(K). Many people choose to make their health accounts grow by putting money towards stocks and mutual funds. Some jump on the precious metals boat and coast into more money by investing small amounts in gold and silver. Just as with a 401(K) or other IRA, you should be mindful of where additional funds are going. You do not want to invest a large percentage of your HSA in a company that goes bankrupt months after your purchase stocks.

2. Take full advantage of qualified expenses

You can withdraw funds from your savings account to cover tax-deferred contributions and tax-free distributions. All of the fund removals, however, must be applied to qualified medical expenses (QMEs). You can potentially save thousands in out-of-pocket expenses related to health and wellness using your HSA as long as you keep the receipts.

3. Use distributions wisely

While an HSA potentially covers every expense related to health and wellness, you may not want to use your plan for small costs. Paying for recurring things such as prescriptions and annual doctor’s visits out-of-pocket gives your savings account the chance to build value, which may be used for emergencies when large payouts are necessary. You should use the distribution incentive sparingly when it comes to small expenses that you can technically afford to pay.

4. Utilize maximum contributions

Contributing the maximum amount to your HSA comes with incredible tax benefits. Your plan’s earning potential increases when you give the maximum dollar amount to your plan. You, then, have the right to deduct up to the full contribution amount from your tax bill, which means that you are not losing money when paying more into your HSA.

5. Study to be a better consumer

You should not choose the first HSA plan offered but rather compare several possibilities before making a decision. Reviewing your health habits is the first step to understanding what you need from an HSA plan. You may not need an account that offers the bells and whistles if you are someone who visits the doctor once a year. You may, however, require a premium plan if you have a preexisting condition that calls for several checkups and treatments throughout the year.

Implementing healthy lifestyle habits is the greatest way to get the most out of your HSA plan. The more that you consume wholesome foods and keep a good workout regimen, the less often you may have to see the doctor. An HSA plan has the potential to be a financial lifesaver during the retirement years if you work the system well.

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