schildi
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Post by schildi on Mar 21, 2011 10:44:39 GMT -5
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. Exactly.
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Plain Old Petunia
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Post by Plain Old Petunia on Mar 21, 2011 10:47:02 GMT -5
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. Plenty of CPAs are CFPs too.
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brdsl
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Post by brdsl on Mar 21, 2011 10:49:57 GMT -5
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. So, your financial planner and investment adviser cannot tell you to place investments in a ROTH or 401k, because those are tax strategies and they are not trained in the tax code?
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schildi
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Post by schildi on Mar 21, 2011 10:49:39 GMT -5
Yeah, SF, you are moving in circles here and are not addressing the questions. The fact that an HSA is not accessible to everyone and requires an HDHP is known, and pretty much irrelevant to the question(s) here, as the OP seems to be eligible.
So again, why would you not recommend somebody to use an HSA for additional retirement savings (you clearly said that)?
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runewell
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Post by runewell on Mar 21, 2011 11:31:06 GMT -5
Yeah, SF, you are moving in circles here and are not addressing the questions. The fact that an HSA is not accessible to everyone and requires an HDHP is known, and pretty much irrelevant to the question(s) here, as the OP seems to be eligible. So again, why would you not recommend somebody to use an HSA for additional retirement savings (you clearly said that)? I wish an HDHP/HSA were available at my workplace. I would agree it is an excellent savings vehicle as an alternative to paying a boatload for insurance.
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schildi
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Post by schildi on Mar 21, 2011 11:47:22 GMT -5
Yeah, SF, you are moving in circles here and are not addressing the questions. The fact that an HSA is not accessible to everyone and requires an HDHP is known, and pretty much irrelevant to the question(s) here, as the OP seems to be eligible. So again, why would you not recommend somebody to use an HSA for additional retirement savings (you clearly said that)? I wish an HDHP/HSA were available at my workplace. I would agree it is an excellent savings vehicle as an alternative to paying a boatload for insurance. Yes, I agree. I max out my HSA to the full $6,150 this year (and have maxed it since we are on the HDHP, 4 years or so) even though our maximum OOP cost is significantly less. I see it as additional retirement savings and a shelter from taxes.
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teen persuasion
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Post by teen persuasion on Mar 21, 2011 11:50:47 GMT -5
I'm surprised that no one has mentioned that payroll contributions to an HSA are not subject to FICA.
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Deleted
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Post by Deleted on Mar 21, 2011 14:24:25 GMT -5
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? If the account is at a place that allows for that, yes.
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Deleted
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Post by Deleted on Mar 21, 2011 15:13:24 GMT -5
It seems to me that SF was making some rather strong statements about HSA's while knowing very little about them.
OP, I think your CPA is giving great advice to contribute to your HSA for extra tax savings. I don't care if it's your CPA, garbage man or uncle, it's great advice for people with HDHP to utilize HSAs to their fullest benefit. The $3K I put in my HSA each year will never be taxed so long as I use it for medical expenses, and I avoid FICA taxes by making it a payroll deduction. As previously mentioned, you can even withdraw it for non-medical expenses in retirement at normal withdrawal rates.
As far as what I do with my HSA, I keep enough in cash to cover my deductible and the rest is invested in Vanguard Index Funds.
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DVM gone riding
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Post by DVM gone riding on Mar 21, 2011 15:25:30 GMT -5
so now that we chatised SF does anyone know if you have regular insurance from your work. can you do an HSA on your own? Or do you have to have the high deductible types of plans?? My thinking was to save money in an HSA while you can so there is more to cover you to help "self insure" which would work better of course if Obama had actually done something about the COST of health care rather then just the methods we pay for it.
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Deleted
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Post by Deleted on Mar 21, 2011 15:34:23 GMT -5
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Post by Deleted on Mar 21, 2011 15:37:16 GMT -5
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SVT
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Post by SVT on Mar 21, 2011 15:57:03 GMT -5
It seems to me that SF was making some rather strong statements about HSA's while knowing very little about them. Exactly. SF is pretty knowledgeable but he's a little off here. SF, contributing to an HSA has to do with taxes which is within the scope of a CPA. There's nothing wrong with getting advice from a CPA on that. If anyone has an HSA, they should be maxing it, if possible, after contributing enough to get the match from the 401k. Because of the tax deduction, you should invest in the HSA in preference to any other retirement savings except for a contribution matched by your employer. If you are in a 25% tax bracket, $1,000 invested in your 401(k) costs you $750 out of pocket, but you will lose much of the money to taxes when you withdraw it. $1,000 invested in the HSA costs the same $750 out of pocket but can be spent tax-free as long as it is used for medical expenses. In addition, HSA contributions via employer payroll deduction are exempt from FICA taxes, where 401(k) contributions are not. If you are too healthy in retirement and can't use the HSA for medical expenses (even past ones), the non-medical portion is still as good as a traditional IRA. Contribution limits for individuals is $3050 and $6150 for a family plan. If you are 55, you can contribute an extra $1000. If you are maxing out your retirement accounts, you should treat the HSA as an opportunity for further savings, like an IRA, and not withdraw from it until you retire. If you have $1,000 in medical bills, paying them from your taxable account leaves the $1,000 in the HSA to grow tax-free (and keeps the right to withdraw $1,000 tax-free in a future year), while paying them from the HSA leaves $1,000 in your taxable account, which will grow subject to taxes since you do not have any room for tax-sheltered contributions. Once you have retired, you can withdraw from the HSA an amount equal to your past medical expenses plus any current expenses tax-free, and withdraw from your other accounts for non-medical expenses. HSAs can be used to pay medicare premiums and other medical expenses in retirement.
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SVT
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Post by SVT on Mar 21, 2011 16:01:24 GMT -5
so now that we chatised SF does anyone know if you have regular insurance from your work. can you do an HSA on your own? Or do you have to have the high deductible types of plans?? My thinking was to save money in an HSA while you can so there is more to cover you to help "self insure" which would work better of course if Obama had actually done something about the COST of health care rather then just the methods we pay for it. As jimmo posted, you must have a HDHP. An HSA is part of a HDHP. The plan is great IMO, especially since I'm very healthy and never have to go to the doctor. It's also good if you are not very healthy and have to go to the doctor/hospital often and/or have costly operations since most of the costs are paid for after the deductible is met.
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cpadvisor
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Post by cpadvisor on Mar 21, 2011 16:46:44 GMT -5
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. Not all CPAs are tax preparers! Auditors, controllers, CFOs, etc... Some CPAs, like me, are also CERTIFIED FINANCIAL PLANNERS(tm). Many CPA firms are now offering financial services as well. The advice provided to the OP was not investment advice - it was tax advice (deduction for the HSA contribution). Reading your uninformed comments really pisses me off.
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Deleted
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Post by Deleted on Mar 21, 2011 17:42:26 GMT -5
I just spoke with a CPA recently and he gave some pretty bad financial advice (completely unsolicited), so I can see SF's point of not mixing financial advice with tax preparation, as a general rule.
He had been a CPA for decades and just got his financial certs. He was myopically focused on the tax side of investments without any concern for return or what my complete financial picture was. Now he was just one guy who colored my opinion, maybe other CPA's give great financial advice. It was however a bizarre experience. I went to him with a tax question and ALL he wanted to talk about was how I needed to invest in real estate to lower my tax liability.
Never did get my tax question answered, so maybe he was just really bad at both jobs.
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Deleted
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Post by Deleted on Mar 21, 2011 17:55:52 GMT -5
^^^ Nobody cares about your money like you do. You can listen to advice from anyone, but at the end of the day, you have to do your due diligence to separate good advice from bad advice.
Everyone has an angle, a biased opinion. Some give bad advice with selfish intentions while many give bad advice with good intentions but limited knowledge.
After reading this forum for a couple of years, I'm often surprised to see the bad/uninformed advice that sometimes comes from the regular posters who generally seem to be rather knowledgeable. It just goes to show that none of us are masters of the personal finance domain. We'll all still learning.
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schildi
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Post by schildi on Mar 22, 2011 9:26:22 GMT -5
I need to check another source on this, which I have at home, prior to making any sort of further judgement.SF, were you going to check your sources and get back to us? What did you find?
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tskeeter
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Post by tskeeter on Mar 22, 2011 15:53:48 GMT -5
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.
SF, your contention that CPAs are not trained in financial planning is not correct. Many CPAs are. CPAs may have a wide variety of specialties. They can include auditing or taxes, but they may also be small business consulting, information technology consulting, or even financial planning. As a CPA, I can assure you that the AICPA was offering continuing education courses in personal financial planning when I got my certificate over 30 years ago. Even before the Certified Financial Planner Board of Standards, the organization that confers the CFP designation, was created in 1985. If you look at the CFP Board of Standards web site, you will find that the CFP requirements and standards were patterned after the requirements and standards for CPAs. You will also find that the educational requirements for CPA certificate candidates allow CPAs to take the CFP exam without meeting any additional educational requirements. Guess that means that the CFP Board of Standards considers CPAs to be as knowledgeable about financial planning as other CFP candidates.
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