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Health Savings Account (HSA) and 529 plan. Assets? 

MillionaireBefore50
Posts: 4

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2/17/2017
njhowie wrote:
FatStacks wrote:

Tax-free, but only if it's for qualified medical expenses though, right?


Correct, but you can carry these forward forever. You can use it after you retire to pay your medicare premiums.


That's right... And there's a 'loophole' that you can exploit. Pay for qualified expenses out of pocket and let the contributions compound instead by investing in stocks for the long-term. Later in life, you can withdraw the money you spent tax-free (make sure you keep the receipts) and use it for non-qualified expenses like vacations or car-repairs. In this way, you have more money saved when you really need it (e.g. kidney transplant or a heart surgery).
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njhowie
Posts: 77

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2/17/2017
njhowie
Posts: 77
FatStacks wrote:

Tax-free, but only if it's for qualified medical expenses though, right?


Correct, but you can carry these forward forever. You can use it after you retire to pay your medicare premiums.
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FatStacks
Posts: 28

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2/6/2017
FatStacks
Posts: 28
wantabeamillionaire wrote:
Also HSAs are the absolute best savings vehicle. Goes in tax free and comes out tax free -- max these out right after you put in enough to get all of your employers 401k match.



Tax-free, but only if it's for qualified medical expenses though, right?
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wantabeamillionaire
Posts: 14

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2/4/2017
You have to count them as assets because they are assets. These arguments to not include them don't make sense. It's like your afraid of your net worth going backward in the kids' college years or when you have a medical expense. STOP. The importance of truly knowing where you are at allows you to make better decisions.

Example: I include my wife's Retirement Medical Savings Account of $16k. If she does not retire from her company it goes away completely but the point right now is she is still with the company and has been for 15 years. She has interviewed and received other offers over the years but when she considers the offers (not all about the money also quality of career) she takes into account the 16k hit to the RMSA and net worth. If she was to pretend it was "money I'll never see again" she would be making less informed decisions. Same thing with 529s and HSAs.

Also HSAs are the absolute best savings vehicle. Goes in tax free and comes out tax free -- max these out right after you put in enough to get all of your employers 401k match.
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MillionaireBefore50
Posts: 4

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1/21/2017
529s and HSAs should definitely be included as your assets. They are in your name and you have 100% control over them. The accounts have direct impact to your present and future net worth. Treating them as 'bills' is tantamount to listing your future grocery expenses as liabilities (which absolutely doesn't make sense).
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wantabeamillionaire
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12/3/2016
Weird argument. Both of these are assets until they are spent just like cash.
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chrisjohn
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10/20/2016
chrisjohn
Posts: 7
Just a suggestion. I have had a HSA for several years and have accumulated a sizable balance. I discovered HSA Bank years ago and placed funds there to take advantage of their investment offerings. Some mutual fund choices and TD Ameritrade option. I liked the simplicity of choosing from their selected mutual fund choices. The choices are poor to fair as far as return/expense ratio. Overall, I was satisfied. Recently I discovered another option that prompted me to move to Old National Bank with their HSA Authority division. The mutual fund offerings are superior in the industry.I was able to place money in a Vanguard fund that is now closed to new investors but open to HSA Authority account holders.Most of the Vanguard options are 'admiral' shares that have a more favorable expense ratio. I am not trying to sell this bank but only want to offer fellow forum members a place to search for a possible change. I made this change 3 months ago so I am not offering a seasoned opinion.
edited by chrisjohn on 10/20/2016
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getagrip
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3/11/2016
getagrip
Posts: 29
Just make sure what is being offered is actually an HSA that allows accumulation over time for the HSA to be considered an asset. For example the Federal Government offers a "Flexible Spending Account" that works similarly to an HSA in that it is non-taxed money you can set aside from salary for medical expenses, however there is a yearly rollover limit of $500 and if you hit the end of the year with more in the account, you lose the money above $500. That's not hit with a penalty, or get something back, they simply adjust the balance to $500 whether you had $520 or $5200 in the account. I hear of a lot of eyeglasses being bought and dental work getting done in the last couple of months of the year. It's more of a planning for expected expenses account than a plan for catastrophic occurrences.
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lazyRiver
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3/11/2016
lazyRiver
Posts: 1
Here's the kicker with an HSA - you can make non-medical withdrawals penalty free after you turn 65. The withdrawals are taxed at your current tax rate like a trad IRA. So it would definitely make sense to add it as an asset.

More here
http://blogs.reuters.com/shaneferro/2013/07/18/hsas-when-your-health-insurance-becomes-a-retirement-account/
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getagrip
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2/9/2016
getagrip
Posts: 29
I don't treat HSAs and 529s as assets to my net worth since I consider those as bills, i.e. paying for college or medical support now so I don't have to pay later. I don't include them in any consideration of savings rate of salary towards retirement.


However, I do include 529s as percentage of savings I am currently making out of income when considering replacement value for what I need to have to retire. For example, say I was saving 10% of salary into 529s for the kids and 15% of salary into 401Ks. I am not currently living off that money yet it is not something I expect to pay into during retirement. So that would mean my replacement cost to maintain my current standard of living would only need to be 75% of current salary just considering those two items.
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azphx1972
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2/1/2016
azphx1972
Posts: 44
I just entered my January 2016 data and forgot to add my HSA balance as it is new for me this year. Thanks for the reminder, I will start adding it next month!
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FatStacks
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1/31/2016
FatStacks
Posts: 28
Thanks for the input everyone!
I'd love to "Fatten" up ALL my accounts wink

I think I'm going to (continue to) leave both the 529 and HSA off of our Asset balance sheet. While it does understate our net worth a bit, I don't think either would affect my "When can I retire" question, which is what I'm really after using this site. (That would change if our HSA had a significant amount in it, but at this time, and for the foreseable future, that will not be the case).

Njhowie - you bring up a good point, and I will include them both in my personal savings rate, since, they are technically savings.

Thanks again!
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njhowie
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1/30/2016
njhowie
Posts: 77
You're certainly free to count either as you best see fit and obviously not counting them will understate assets/net worth.

I could make an argument for treating each as an asset, or to just not include.
I'm asking because at the end of every year I calculate my personal savings rate, and I'm wondering if I should treat my HSA contributions as "savings".

Well, that again is going to be subjective...by funding these, you are certainly "saving" - it is not money that you are pissing away on discretionary items. So, if you're looking at it in terms of your "savings rate", I could see including both. Both are technically in fact assets that you could tap into should you have a financial emergency with no other means available.
edited by njhowie on 1/30/2016
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chrisjohn
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1/30/2016
chrisjohn
Posts: 7
I have both plans.I do not use the 529 in any financial statements. The HSA continues to grow as I do not use it for current medical expenses.It is planned for use in event of high medical cost in retirement or to supplement current LTC policy in retirement years. I would like to position the account to earn annual income of 3-7K and use this to pay pharmacy,dental,etc. I am at a point that I could do this now except that the stock market has not been kind to my holdings over the past 12 mo.
Estate tax planning would dictate that it would be more advantageous to use HSA funds and hoard Roth fund.For this reason I will tap the HSA income in retirement years and allow Roth to grow.
For these reason FatStacks I recommend that you allow the HSA to "fatten up" and provide for extra level of financial security.
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licid9
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1/29/2016
licid9
Posts: 45
I don't have a HSA, but I do have a 529 and I don't include it in my savings rate.

I tend to agree with you on not counting the HSA as well; although my counter argument would be it is something that is actually intended to be spent by you....just on a very specific category (health)....anyone else have thoughts?
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FatStacks
Posts: 28

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1/28/2016
FatStacks
Posts: 28
Just curious, does anyone participate in an HSA, and if so, do you treat that as an asset?
What about 529 (Education Savings) plans?

I have both, and I treat them both as "money I'll never see again", so I don't count them.
I'm asking because at the end of every year I calculate my personal savings rate, and I'm wondering if I should treat my HSA contributions as "savings".

Thanks in advance!
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