Anonymous
Anonymous asked in Business & FinanceTaxesUnited States · 1 month ago

HSA date question?

Are they like an IRA in that you usually have until 4/15 of the next year to fund the prior year?  Thanks.

I have not funded this years yet and my broker pays zero in a money market so I could gain more interest in a regular account and wait to fund it until the last minute. Unless I find more stocks to buy. Right now its about 50% in cash but it would be 62% when I add 2020s and 2021s contributions. I know 2020 is $4550 for me. I guess 2021 might be slightly higher.

Update:

Yes, 2021s limit will be $50 higher so $4600 with the catch up for old folks like me.

Update 2:

Fidelity has no fee HSA accounts. Previously I had it in one of the few credit unions with no fees.

3 Answers

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  • 1 month ago
    Favourite answer

    Yes, the HSA contribution needs to be made by the year's tax deadline.  Generally, April 15th.

    The catch-up age for HSAs is 55 not 50 like 401Ks and IRAs.

    The single contribution limit for 2020 is $3550 or $4550 with the catch up (paid by April 15, 2021).  The limit for 2021 is $3400 or $4400 with the catch up (paid by April 15, 2022).

    Although, HSAs can be used as investment accounts.  However, the fees most HSA administrators charge for full investment accounts, often end up eating any gains.  There are many fee free HSA accounts with a savings account structure.

    Let's say you have a "regular account" (savings account?) that is paying top of the line interest right now - about 1.75% APR.  For $4450, that means you will earn about $39 in 6 months on this money.  The average savings account interest is about .9% so you would be earning about $20 in 6 months.  Unless you manage all your finances this closely, seems like there are better ways to save $20-$40 over 6 months, than waiting to fund the HSA. 

  • Anonymous
    1 month ago

    If your employer contributes (or there is a premium conversion), that goes by calendar year.

    If *you* contribute, it goes to the due date.  See IRS publication 969. You can even file first and contribute afterwards, but I wouldn't recommend that.  Be sure to DESIGNATE payments made from 1/1 to 4/15 as for the prior year.  That is reported to the IRS.

    There are different approaches to using an HSA.  Some people save up their receipts each year and only contribute enough to reimburse themselves pre-tax.  Other people put in the maximum each year and reimburse themselves periodically.  A few people push the envelope and save up their receipts and reimburse themselves when they are 65.  (Personally, I wouldn't do that because the large amount could trigger an audit and they would have to prove they weren't reimbursed for any of the amounts from other insurance.)

    I fell into group two.  I put in the max which I later used to pay LTC insurance premiums.  I finally emptied the account this year.Sadly, people are giving thumbs downs for the CORRECT answers.  The wrong answer just has more of them....

  • 1 month ago

    No, your contributions to HSA have to be in the calendar year.  You only have a bit beyond that to use the money.

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