Health & Education Savings
Planning ahead requires smart savings options
Good health and education are vital to a fulfilling life. Address their costs with a Health Savings Account and Coverdell Education Savings Account, both featuring specific tax advantages that help you make the most of your deposits.
An HSA provides specific tax advantages to help you address unexpected medical expenses. You must be enrolled in a high-deductible health plan (HDHP) in order to qualify.
- Contributed funds are not subject to federal income tax at time of deposit
- Any interest earned is tax-free
- No taxes paid on money withdrawn for qualified medical expenses
- Unspent HSA funds roll over and accumulate year after year (unlike a flexible spending account) and can be used anytime, including in retirement
- You must have coverage under a qualified high deductible health plan. You must not be covered under another health care plan. You must also not be eligible for coverage via your spouse’s plan.
- You must not be currently enrolled in Medicare. In practice, this means that those over age 65 are generally ineligible to contribute to a health savings account, since you are automatically enrolled in Medicare Part A and B at age 65.
- You must not be eligible to be claimed as a dependent on someone else’s income tax return.
There are many nuances to these rules and more rules. Contact us for more detailed information.
Better benefits packages help you recruit and retain talented employees. Provide an HSA option to employees so they can plan ahead for medical expenses. High-deductible health plans can be purchased for significantly less money than a traditional plan, and you can transfer those savings as contributions to employees' HSAs.
Coverdell ESAs are ideal accounts for parents and grandparents to save for tuition, fees, books, supplies and, in some cases, room and board. Earnings will accumulate tax-free at a rate that matches our IRAs.
- Both overnight and certificate options available
- Maximum annual contribution up to $2,000 per child (restrictions exist depending on income levels)
- Money must be used for specific, education-related expenses
- Tax implications come into play if the child doesn’t go on to higher education