08/19/2024
Are you taking full advantage of your workplace benefits? Are health savings accounts (HSAs), 401(k)s, disability insurance, and flexible spending accounts (FSAs) offered by your workplace?
Here's a quick breakdown:
HSA: Triple tax-advantaged account for qualified medical expenses. Your contributions are pre-tax and grow tax-deferred, and withdrawals for qualified expenses are tax-free. If you spend your HSA funds on non-qualified expenses before age 65, you may be required to pay ordinary income tax and a 20% penalty. After age 65, you may be required to pay ordinary income taxes on HSA funds used for non-qualified expenses. HSA contributions are exempt from federal income tax; however, they are not exempt from state taxes in certain states.
401(k): Retirement savings plan with pre-tax contributions and potential employer matching. We can help individuals determine a contribution amount that fits their situation. Once you turn 73, you must take the required minimum distributions from your 401(k). Withdrawals are taxed as ordinary income and may be subject to a 10% federal income tax penalty if taken before age 59½.
Disability Insurance: Income replacement if unable to work due to illness or injury—a safety net designed to help you and your family. Disability obligations are dependent on the issuing company’s ability to make claim payments.
FSA: A way to use pre-tax dollars for eligible healthcare and dependent care expenses. Unlike an HSA account, you may have to spend your FSA funds before year-end, adhering to the “use it or lose it” rule. There are some exceptions.
Don't miss out on these valuable resources! Understanding and maximizing your benefits can help your financial situation.
Need help navigating your workplace benefits? Let's connect. We might be able to offer some insights and help create a personalized strategy aligned with your financial goals. 🤝
