CPA worth every penny

[hsclassic]

My CPA earned every penny I pay her to do my taxes. Called yesterday to clarify 2 things, told me I was getting a sizable sum back (yeah, especially given I expected to pay as much as we are getting back).

But the best part was this - 2010 was our first year of having an HSA. She has never offered us financial advice before, but did yesterday. She noted we were tremendous savers (we are!), and advised we could add more into the HSA and get approx. 25% of our additional deposit for 2010 as a tax refund. So not only do we get 100% of the additional deposit for future medical expenses, we do so at 75% of the expense.

I thought I was pretty well-versed on our financial savings, but missed this one. I will gladly run my check to her this week for helping us save for future medical expenses while saving us money now!

And, yes, the unexpected tax refund will be replenishing our savings (less a little fun money) from where I wrote the HSA check.

Hope all of you get a positive surprise this tax season too!

[Gardening Grandma]

You can still add to your HSA and it will count as a 2010 contribution?

[hsclassic]

Yes, as the HSA is effectively an IRA for medical expenses. Check your plan's rules to be certain. I'm with UHC, and just had to find the form and fill it out for 2010.

Clearly this is with after-tax dollars, as opposed to pre-tax which I also have through payroll deduction.

[Deleted]

Mar 21, 2011 8:24:49 GMT -5 hsclassic said:

Clearly this is with after-tax dollars

Not if you are deducting it on your tax return.

[schildi]

Mar 21, 2011 8:24:49 GMT -5 hsclassic said:

Yes, as the HSA is effectively an IRA for medical expenses. Check your plan's rules to be certain. I'm with UHC, and just had to find the form and fill it out for 2010.

Clearly this is with after-tax dollars, as opposed to pre-tax which I also have through payroll deduction.

I really must be missing something here. Didn't you say you are deducting it?

Mar 21, 2011 8:19:51 GMT -5 hsclassic said:

So not only do we get 100% of the additional deposit for future medical expenses, we do so at 75% of the expense. !

I don't really understand this either. Is this some sort of super trick making it a double tax savings or something? It is clear that the HSA money is pre-tax, so what is the big new finding here?


Edit: oh, Archie was quicker about the deduction!

[Savoir Faire-Demogague in NJ]

You are not getting good advice from your CPA.
As a side note, a CPA is not qualified to provide financial planning advice.

[hsclassic]

I'll know more once I get the final documents, but am confident in the CPA having it right on the HSA. My independent research also appears to support this effort as well.

[Savoir Faire-Demogague in NJ]

I'll know more once I get the final documents, but am confident in the CPA having it right on the HSA. My independent research also appears to support this effort as well.

One puts money into an HSA to help with medical costs, not as a savings/tax reduction investment.
This is why getting financial advice from a CPA is dangerous.

[schildi]

Mar 21, 2011 8:45:16 GMT -5 Savoir Faire-Demogague in NJ said:

I'll know more once I get the final documents, but am confident in the CPA having it right on the HSA. My independent research also appears to support this effort as well.

One puts money into an HSA to help with medical costs, not as a savings/tax reduction investment.
This is why getting financial advice from a CPA is dangerous.

SF, and HSA can be used as addtional tax advantaged retirment savings, even if the money is used for medical purposes. That's why maxing it if you can is a good idea imo.
What I don't understand here is the "double savings" and the "after tax" portions. I have a feeling that hsclassic's CPA is right, but hsclassic may not 100% understand it, or somehow not saying it right. Or I just don't get it.

[Savoir Faire-Demogague in NJ]

SF, and HSA can be used as addtional tax advantaged retirment savings, even if the money is used for medical purposes. That's why maxing it if you can is a good idea imo.

Just a question....where does the money sit? Can you put it into an S&P 500 Index fund for example?

[schildi]

Mar 21, 2011 9:07:58 GMT -5 Savoir Faire-Demogague in NJ said:

SF, and HSA can be used as addtional tax advantaged retirment savings, even if the money is used for medical purposes. That's why maxing it if you can is a good idea imo.

Just a question....where does the money sit? Can you put it into an S&P 500 Index fund for example?

Yes, that is possible, if such a fund is offered by the HSA bank, and if your plan allows that. I can do that. There are usually plan rules that allow you to invest money above a certain threshold. In my case, it's anything over $10K I believe. I would not recommend risking any HSA money under $10,000 anyway, as you may need it for medical expenses.

[Savoir Faire-Demogague in NJ]

Yes, that is possible, if such a fund is offered by the HSA bank, and if your plan allows that. I can do that. There are usually plan rules that allow you to invest money above a certain threshold. In my case, it's anything over $10K I believe. I would not recommend risking any HSA money under $10,000 anyway, as you may need it for medical costs.

No credible financial planner or advisor would recommend this as a savings/investing vehicle.
Use an HSA to save money for medical care.
Save/invest money in a savings/brokerage account that is diversified.
Same with buying insurance.

[schildi]

Mar 21, 2011 9:16:23 GMT -5 Savoir Faire-Demogague in NJ said:

Yes, that is possible, if such a fund is offered by the HSA bank, and if your plan allows that. I can do that. There are usually plan rules that allow you to invest money above a certain threshold. In my case, it's anything over $10K I believe. I would not recommend risking any HSA money under $10,000 anyway, as you may need it for medical costs.

No credible financial planner or advisor would recommend this as a savings/investing vehicle.
Use an HSA to save money for medical care.
Save/invest money in a savings/brokerage account that is diversified.
Same with buying insurance.

I have heard different. Most (if not all) people will have medical expenses (dental expenses can be covered, too) during retirement that can be paid for with pre-tax money now if somebody does not max an HSA now and qualifies.
I believe you can also open an HSA with a different financial institution (Fidelity, as an example?) if you qualify (are covered under an HDHP) and don't like the employers HSA bank choice. If you are in a high tax bracket now, then using an HSA is a good idea to make sure you pay for medical expenses with pre-tax money, even if it is needed during retirement.
I rather have the money in my HSA account than paying it to Uncle Sam, lol, believe it or not.

[Savoir Faire-Demogague in NJ]

I rather have the money in my HSA account than paying it to Uncle Sam, lol, believe it or not.

You can put money into an index fund and not pay taxes too.

Here is some info on it. This individual seems to favor using an HSA as a hybrid savings/med expense account:

www.fivecentnickel.com/2010/02/22/using-your-hsa-as-a-retirement-investment-vehicle/

[schildi]

BTW, SF, I think you can withdraw money during retirement from an HSA for any reason and just pay income taxes (no penalty), just like with a 401(k). If used for medical expenses, you pay no tax ever.
So in fact, an HSA is better than a 401(k) even for retirement savings. Are you saying that contributing to a 401(k) is a bad idea, and no credible financial planner would advise using a 401(k) either? If that's the case ....

[Savoir Faire-Demogague in NJ]

BTW, SF, I think you can withdraw money during retirement from an HSA for any reason and just pay income taxes (no penalty), just like with a 401(k). If used for medical expenses, you pay no tax ever.

Yes, that is right, it has to be used for med expenses.

So in fact, an HSA is better than a 401(k) even for retirement savings. Are you saying that contributing to a 401(k) is a bad idea, and no credible financial planner would advise using a 401(k) either? If that's the case ....

HSA contributions are limited. I can put $22,000 into a 401K, plus another $6000 into a Roth annually. An HSA is a fraction of that amount.
I don't know if my firm offers this...let me check...

[runewell]

Mar 21, 2011 8:45:16 GMT -5 Savoir Faire-Demogague in NJ said:

This is why getting financial advice from a CPA is dangerous.

I think getting advice from a discussion forum is even more dangerous.

[Savoir Faire-Demogague in NJ]

We do not have HSA accounts as an employee benefit here.

[schildi]

Mar 21, 2011 9:34:01 GMT -5 Savoir Faire-Demogague in NJ said:

BTW, SF, I think you can withdraw money during retirement from an HSA for any reason and just pay income taxes (no penalty), just like with a 401(k). If used for medical expenses, you pay no tax ever.

Yes, that is right, it has to be used for med expenses.

So in fact, an HSA is better than a 401(k) even for retirement savings. Are you saying that contributing to a 401(k) is a bad idea, and no credible financial planner would advise using a 401(k) either? If that's the case ....

HSA contributions are limited. I can put $22,000 into a 401K, plus another $6000 into a Roth annually. An HSA is a fraction of that amount.
I don't know if my firm offers this...let me check...

If the money is withdrawn in retirement and NOT used for medical expenses, then all you pay is taxes, just like with a 401(k).
Sure there are limits to the amounts. I am talking about an addition to a 401(k).
SF, why did you say a credible advisor would not recommend using an HSA for additional retirment savings? I don't understand that, and you have not explained it. As I said, I think the rules look even better than those for a 401(k).

[Savoir Faire-Demogague in NJ]

I think getting advice from a discussion forum is even more dangerous.

A CPA's expertise is Accounting and many have expertise in taxes.
A CPA's primary fiduciary responsibility is to provide their clients with quality and accuracy in preparation of tax forms and saving you taxes.
They have no expertise in providing investment advice to grow one's wealth.

[Savoir Faire-Demogague in NJ]

SF, why did you say a credible advisor would not recommend using an HSA for additional retirment savings? I don't understand that, and you have not explained it. As I said, I think the rules look even better than those for a 401(k).

An HSA account is used for accumulating money for medical expenses.
HSA contributions for a single person are around $3000, according to that link, which I am not vouching for. A 401K allows one to contribute $22,000.
I have to check on a source first. As I pointed out, my firm does not offer HSA's, so for me it is academic.

[DVM gone riding]

SF no one is saying save in a HSA instead of a 401k but if you can do it ontop of the 401k/roth why wouldn't you. at some point in time you will need it and there are a lot of tax advantages to doing so.

[Savoir Faire-Demogague in NJ]

SF no one is saying save in a HSA instead of a 401k but if you can do it ontop of the 401k/roth why wouldn't you. at some point in time you will need it and there are a lot of tax advantages to doing so.

Shildi has said this. I would not put money into an HSA, only because I do not have this benefit available.
I need to check another source on this, which I have at home, prior to making any sort of further judgement.

One does need to have a high deductible health plan as a prerequisite.

[The J]

Mar 21, 2011 9:45:03 GMT -5 Savoir Faire-Demogague in NJ said:

SF, why did you say a credible advisor would not recommend using an HSA for additional retirment savings? I don't understand that, and you have not explained it. As I said, I think the rules look even better than those for a 401(k).

An HSA account is used for accumulating money for medical expenses.
HSA contributions for a single person are around $3000, according to that link, which I am not vouching for. A 401K allows one to contribute $22,000.
I have to check on a source first. As I pointed out, my firm does not offer HSA's, so for me it is academic.

A 401(k) allows an old person to contribute $22k annually. I can't. Furthermore, would you say it was bad if a 401(k) allowed someone to contribute $25k annually? No. So why not contribute the $3k to the HSA in addition to the 401(k) contribution?

The only bad advice is your pontificating that a person shouldn't listen to their CPA. An IT guy is less qualified to give financial advice based on your criteria, yet you expect people to listen to you.

[Savoir Faire-Demogague in NJ]

A 401(k) allows an old person to contribute $22k annually. I can't. Furthermore, would you say it was bad if a 401(k) allowed someone to contribute $25k annually? No. So why not contribute the $3k to the HSA in addition to the 401(k) contribution?

In order to contribute to an HSA, you have to have a High Deductible Health plan. Most individuals do not have this sort of health plan.


The only bad advice is your pontificating that a person shouldn't listen to their CPA. An IT guy is less qualified to give financial advice based on your criteria, yet you expect people to listen to you.

A cpa's expertise is not in wealth creation, it is in taxation. I listen to the cpa who does my taxes, it ends there. I do what my investment advisor tells me to do regarding investing, and have done very well the last three years.

[The J]

In order to contribute to an HSA, you have to have a High Deductible Health plan. Most individuals do not have this sort of health plan.

What's your point? Are you acknowledging that you're wrong? We're not discussing a hypothetical situation. We're discussing a situation where a person obviously has a HSA and received advice to contribute more to it.

[Savoir Faire-Demogague in NJ]

What's your point? Are you acknowledging that you're wrong? We're not discussing a hypothetical situation. We're discussing a situation where a person obviously has a HSA and received advice to contribute more to it.


The thread topic is two-fold. Getting investment advice from a CPA, and the advantages of putting money into an HSA.
I posted earlier about deferring until I can check a source I have at home.
An HSA is useful only if one is qualifed to use the account.
A CPA should not be consulted for wealth creation and investing.
Nothing outrageous here.
Even you can understand this. You are lawyer right?

[brdsl]

A good CPA = Wealth Creation.


If they are not making you money....find a different one.

[Savoir Faire-Demogague in NJ]

A good CPA = Wealth Creation.
If they are not making you money....find a different one.

A CPA's expertise is in the tax code. Their job and fiduciary responsibility is to complete your tax forms ethically and competently.
Their training and licensing is not in financial planning and investment advisory.

[The J]

Mar 21, 2011 10:29:09 GMT -5 Savoir Faire-Demogague in NJ said:

What's your point? Are you acknowledging that you're wrong? We're not discussing a hypothetical situation. We're discussing a situation where a person obviously has a HSA and received advice to contribute more to it.


The thread topic is two-fold. Getting investment advice from a CPA, and the advantages of putting money into an HSA.
I posted earlier about deferring until I can check a source I have at home.
An HSA is useful only if one is qualifed to use the account.
A CPA should not be consulted for wealth creation and investing.
Nothing outrageous here.
Even you can understand this. You are lawyer right?

Your first response on this thread was that the OP wasn't getting good advice:

You are not getting good advice from your CPA.

Do you stand by that statement, or not?

The idea that a CPA shouldn't be consulted for wealth creation and investing is actually pretty outrageous. Just because someone has a CPA doesn't make them unqualified. Many CFPs have CPAs. The fact that someone is a CPA does not make them unqualified to give wealth creation advice. Part of wealth creation is understand tax avoidance strategies -- your CPA should absolutely be advising you as to those things.