Message Font: Serif | Sans-Serif
 
No. of Recommendations: 3
Next week I'll get the materials for open enrollment, and I'll be able to see how much more it will cost me to have the traditional low-deductible PPO option compared to the HSA option (those will be the only two options this year). I also don't know what the deductible will be or how much possible employer contribution is out there. I suspect the numbers will tell me to go with the HSA, but I can'tt be sure yet.

By the way -- did you know that if you fund your HSA with payroll deductions -- making it a Section 125 cafeteria plan -- the HSA contributions are not only pre-federal income tax but also not subject to Social Security and Medicare taxes? On the other hand, 401K contributions are subject to SS and Medicare taxes. So putting a dollar into an HSA instead of a 401K can actually save you 7.65 cents in payroll taxes.

I could see that as a potential tiebreaker in some situations. For sure I'll start with the 401K up to the company match, and if I go with the HSA option I'll probably max that out (not sure how much that needs without knowing the employer contribution) and then work toward the 401K and Roth IRA again.

#29
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.