Fools:I did a legal/tax analysis of MSA's about a year ago for a client but have since heard little about them. As we close this first year, have any fools had any experiences with MSA's they would be willing to share?They are a great tool, but it seems they are not being fully utilized.ThanksGG
Gordgekko,I'm in the midst of doing some research on MSA's. I'd like to hear what you know about them to date.I'm reading some stuff at the IRS web site and am confused about the tax benefits. First of all it says that interest and other earnings on the assets in an MSA are tax free. And the contributions are tax deductable. Then is says that you can make tax-free withdrawals from the MSA to pay for qualified medical expenses. If I'm reading this correctly this is a fantastic deal! Much better than an IRA or a Roth IRA! No taxes whatsoever?! Also, can an MSA be set up with a discount broker or mutual fund company the way an IRA can?Thanks,Pooksterish
Pook:All of the above is TRUE TRUE TRUE....and there's sooooo much more. I can not elaborate but there are certain ways to transform this MSA into a long term tax free trading account.What's the downside?Well the only companies setting up MSA's are like Time/Fortis and Golden Rule. Have you ever heard of these...me neither. They also require you to purchase their high deductible insurance through them.That kind of brings up a second point. The only way that you can set up one of these accounts is through one of these schleppy cos.GG
[[I did a legal/tax analysis of MSA's about a year ago for a client but have since heard little about them. As we close this first year, have any fools had any experiences with MSA's they would be willing to share?]]The biggest problem is, as I understand it, is the definition of "high deductible" insurance policies. Remember that insurance laws are generally state specific. So many of the state insurance laws didn't conform to the federal definitions...and there was to effort to do so. That being the case, a whole state could be wiped out of participating in MSA, simply because there was no "high deductible" insurance to be had anywhere.The second problem has to do with the administration. Since the money goes in and out in (generally) a single year, the trustee/administrator of the plan (bank or broker) doesn't have any real chance to make any money on those deposits. So many of them are charging hefty fees to administer the MSAs. Simply another government committee designing a horse, which turned out to be a zebra.TMF TaxesRoy
I've been looking into MSA's for several months, and have been frustrated by the limitations that have been mentioned. The companies I looked at that offer MSA's(FlexMSA and Wells Fargo)offered very low interest (I think around 2%) on the savings accounts, and the health insurance policies they offered seemed to have a lot of catches--specifically co-pays *after* the high deductible was met.One good point with both of these places is that you can invest savings in excess of around %$2000--but through brokers they choose.I already have a high deductible insurance policy, so it p***es me off that the places I already do business with --Trigon Blue Cross and Blue Shield, and Virginia Credit Union--were not interested in administering such an arrangement.Anyway--end of long gripe. Today I found on the internet a promising source. Called Golden Rule Insurance Company. They offer a high deductible insurance policy with no co-pay. Their Trustee is Northern Trust Inc in Chicago, but they have no problem with customers using a trustee of their own choosing. Also, your savings is put into a money market account and earns 5% interest. Unlike FlexMSA and Wells Fargo, they have not made an arrangement for investing, but the agent I spoke to said they were looking into it. This company has been offering MSA's since 1993, i.e. before there was a tax advantage. Does anyone know anything about this insurance company?Margo
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