There are financial transition points that can be related to health. My mom was afraid of the trust my dad had worked out with the attorney, and she wouldn’t sign the documents until dad was dying and my brother assured her that she had access to all the funds (it was a AB trust in the 1990’s, something set up due to their situation in their state regarding taxes). A few years earlier, my parents for the first time gifted each of their 5 children $10,000 – dad realized that they didn’t need the money but the children/grandchildren could really use that cash boost. The year my mother was dying from dementia, we got a great offer (by the person who purchased dad’s commercial property) on the five unit apartment and large paved lot that was contingent to the commercial property – this was a nice infusion on inheritance to us five siblings/families.
Some on this thread figure out with time if their nest egg is big enough to decide how to spend it down. Sometimes a health crisis redirects decisions.
I don’t recall exactly what was in the A and the B side of the trust, but with dad deceased, the 5 unit apartment was inheritance with his prior death. The trust dissolved after mom passed and all assets disposed of.
My younger son is interested in investigating whether he should save and invest his HSA funds for retirement, utilizing money outside of his HSA for medical costs. Typically, he uses all of his HSA contributions for health care every year. I don’t know what to tell him, as I’ve never done that.
My initial thought is that if he has extra money, first order of business is to put it in a Roth, if he isn’t doing so. He does fully contribute to his 401K, which I believe is a Roth 401K. What do you in the know think?
My point was that if he has extra money to save and it’s a choice between putting it in a Roth or utilizing it for medical expenses instead of using the HSA funds so he can save them, he should put it in a Roth.
But he might already be funding a Roth anyways. I’m just not sure what to tell him about leaving money in an HSA for years and spending money outside of that for his medical expenses.
Ouch—I assumed since Biden was in office until noon on Jan. 20, he had a couple of weeks to get this signed! Can you explain why? Is it because the legislative session ends on that day?
Bills must be signed within 10 days of passing. This one passed on December 21 in the senate. Because Congress is no longer in session now, it will not become law without the signature.
So…December 31…that’s the last day.
There is a WEP GPO task force that is keeping an eye on this…hopefully. They worked very hard to get this passed in both houses…and it was by a 2/3 majority in both, I believe.
Also, a new Congress…that did NOT pass this bill is sworn in on January 3.
We don’t use our HSA for our yearly medical expenses.
HSAs are triple tax advantaged. You get a deduction on the contribution, the earnings grow tax free and withdrawals are tax free as well if you have a medical bill to offset the withdrawal.
We are essentially using our HSA for more tax advantaged retirement space. We also save/scan in all paid medical receipts so that when we will want/need to withdraw money from the HSA - we have plenty of medical expenses to show as the reason for the withdrawal. There isn’t anything in HSA regulations that states withdrawals must be made at the same time expenses are incurred/paid for.
@busdriver11–the only additional comment is that one cannot reimburse oneself years later if those same expenses were used to claim the itemized medical deduction. I have had a $7000 deductible per person/ $14,000 for two people OOP max for several years. There were a couple of years when we triggered the $14K OOP max (+ other unreimbursed but legitimate medical expenses) and income was low enough that it made sense for me to itemize. I cannot reimburse myself later for any expenses incurred during a year that I itemized instead of claiming the standard deduction.
In addition, it certainly is tough to know whether one will ever itemize again, as tax laws could easily change. We used to always itemize, then went with standard deduction after the 2017 tax law change, then next year our medical will be so high, we’ll itemize. Confusing!
I would be much more likely to itemize if the SALT cap were lifted, but yes, you are correct. You have to stay current because something changes constantly. The good news is that the internet makes it very easy to search for the answers.
We have a well funded but have also used our HSA. An Important thing to remember as you get close to Medicare, you have to stop funding the HSA at least 6 mos before starting Medicare to avoid a penalty. There was also a recommendation to stop selecting a high deductible insurance plan a year or so before planning to start Medicare (I believe those both go hand in hand).
One friend also decided to save all of her medical expenses until after she retires (she is past 65) and then submit years of reimbursable medical expenses to her HSA. While it’s a cost saving measure it seems like a colossal HA. I tip my hat to those of you who can do that!
I had no idea about the rule (tax implications) of continuing to fund an HSA six months before starting Medicare. Thanks for the heads up.
I have years to go before I’m Medicare eligible so hopefully I will remember this rule by then, and I will only be eligible to partially fund the HSA in the year I turned 65.
The following information shows up on the Massachusetts State retirees’ website and states that President Biden must sign the bill by January 6th:
"On the evening of December 27th, HR82 was submitted to President Biden for final approval. Below is the latest information on the final steps for HR82 to be signed into law, as well as implemented. Once we have additional information, we will let our members know. Meanwhile, we ask for your patience and wish you a very Happy Holiday season.
HR82 was passed by the US Senate by a vote of 76-20 early Saturday morning. The bill passed on a clean vote, without amendment.
The bill was submitted to the president for final approval on the evening of 12/27.
President Biden is on record supporting full repeal of WEP/GPO. We have received word from the White House that he intends to sign HR82 into law. There is no reason to believe differently. The president has 10 days in which to act, which runs through Monday, January 6th.
Given the fact that we are in the middle of the holidays, there is a likelihood that the bill may not be signed until after New Year’s Day. Given the timing with the holidays, we must be patient."
As a current Massachusetts state employee who also worked for 24 years in the private sector, I’ll be happy to have my full social security benefit when I retire.
I think about many things with our retirement. The point about remodeling the house has to do with our retirement planning with selling at some point but also figuring out juggling the sale of the house and purchase of another property in another state - our current home is a sizable portion of our retirement nest egg. We plan to buy a lesser priced home when the time comes, but financing another house, moving stuff we want and then selling current home – all ties into money and retirement. And various laws – our home has appreciated but keeping up with what was spent on upgrades before selling and making the transition (I know there is a basis for federal tax with one time w/o having to claim capital gains, but would have to really think through what would be the best way to handle with time/energy/money - and getting the house we want to buy).
I never thought in retirement that I would have a DD/SIL have 5 children within 7 years - and DH and I are adapting out time and energy (and some money).
I do agree that some people do adjust what they think about when to retire based on what is happening with their children (and grandchildren). Some high earners do not retire because of their cash stream - they can fund all kinds of great stuff for their family and enjoy doing so. A husband and wife may not agree about how much is needed in retirement and at what age - and they have to work that out.
