Supporting employees’ retirement journey: The power of the HSA

by Kevin Robertson | Originally posted on Benefits Pro

According to a Plan Sponsor Council of America (PSCA) survey, half said that they promote HSAs as part of a retirement savings strategy to employees.

A point of emphasis should be the advantages of health savings accounts (HSAs) and how they fit into a carefully planned, multi-pronged retirement strategy that combines government-sponsored Social Security and Medicare and employer-sponsored plans such as 401(k)s.

HSAs have unique savings and tax advantages that make them an important factor in developing a retirement strategy. Like a 401(k), employee contributions and any employer fundings are made with pre-tax dollars. Both are owned by the account holder, are portable and earnings over the life of the accounts are not taxable. The big difference is that money withdrawn from an HSA for IRS-qualified medical expenses is tax-free, whereas 401(k) withdrawals are taxed as regular income.