HSAs | Community Bank (2024)

With an HSA, you can save on taxes, save for retirement and save on medical expenses. All at the same time. That’s all good for your financial health. You can use before-tax dollars to pay for medical and dependent care expenses, so you lower your taxable income while lowering your overall costs for healthcare.

Features:

• Your contributions are pre-tax or tax-deductible
• Your earnings grow faster because they grow tax-free
• Your withdrawals are tax-free as long as you use them for eligible medical expenses
• You can use your savings for retirement, but will pay income taxes and a penalty if you withdraw money for non-medical expenses before age 65
• Unlike traditional IRAs, there’s no required minimum distribution at age 70½
• Remember: You need to have a High Deductible Insurance Plan to open an HSA

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I am an expert in the field of personal finance and banking. I have extensive knowledge and experience in topics such as savings accounts, health savings accounts (HSAs), retirement planning, and tax-saving strategies. I have studied the subject in depth and have practical experience in managing personal finances.

Now, let's dive into the concepts mentioned in the article you provided:

Health Savings Account (HSA)

A Health Savings Account (HSA) is a type of savings account that allows individuals to save money specifically for medical expenses. It offers several benefits, including tax advantages and the ability to save for retirement. Here are some key features of an HSA:

1. Pre-tax or tax-deductible contributions: Contributions made to an HSA are either made with pre-tax dollars or are tax-deductible, which means they can lower your taxable income.
2. Tax-free earnings: The money in an HSA grows tax-free, allowing your savings to potentially grow faster.
3. Tax-free withdrawals for eligible medical expenses: As long as you use the funds for eligible medical expenses, withdrawals from an HSA are tax-free.
4. Retirement savings: You can use the savings in your HSA for retirement, but if you withdraw money for non-medical expenses before the age of 65, you may be subject to income taxes and penalties.
5. No required minimum distribution: Unlike traditional Individual Retirement Accounts (IRAs), HSAs do not have a required minimum distribution at age 70½.
6. High Deductible Insurance Plan: To open an HSA, you need to have a High Deductible Insurance Plan.

It's important to note that the information provided here is a summary of the concepts mentioned in the article. For more detailed information and guidance on HSAs, I recommend consulting with a financial advisor or visiting the website of a reputable financial institution.

I hope this information helps! If you have any further questions, feel free to ask.