No. of Recommendations: 1
Second of all, and more importantly, you can spend it on whatever you want after age 65.

But I believe that unless the expense is medical-related, the distribution is taxable (without the 10% penalty however).

If I could pick only one to fund, I'm not certain which it would be. You make a good point that you can both deduct and get tax-free compounding with an HSA. But if you spend your HSA, you're not going to have it during retirement. Also, at present, custodians tend to charge much higher fees for HSAs than for IRAs (and often the range of available investment vehicles is considerably less).

I clearly have not read enough about the HSA because wasn't the MSA an account that had to be used by year-end or the money was lost forever? Did they change that aspect with the HSA?

I don't pretend to be an expert, but I think you're thinking of an FSA, not an MSA. A Flexible Savings Account had to be spent each year, or the balance was lost. An MSA (Medical Savings Account) was very similar to an HSA, though the HSA does have several advantages (one of the most notable being that it's available to a much wider group of people).

I think 2005 will become the "year of the HSA" -- that is, the year that "everyone" learns about them. For those interested, the earlier you learn about them, the earlier you can take advantage of them.

It's easy to find a ton of resources via google, of course. One good place to start is:

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