HSAs

The Internal Revenue Service issued its annual inflation adjustment Wednesday for health savings accounts for 2021, at a time when many taxpayers are worried about their health in the midst of the novel coronavirus pandemic.

The majority of U.S. workers do not have enough savings to help them in the event of a medical emergency and often turn to their retirement funds for help.

For starters, they can use the windfall to pay off debt, shore up their HSAs and build a cash reserve.

From Roth conversions to QHFDs: The coronavirus pandemic is forcing difficult questions, and clients rightfully are looking for answers that advisors are uniquely suited to provide.

Aside from refinancing, retirees are advised to consider downsizing their homes to reduce overall spending.

Some tax credits are refundable, meaning they can get a refund in case the credits exceed their actual tax liability.

Aside from income taxes, retirees will also pay consumer taxes and may face a 3.8% Medicare surtax.

“The advice I give is to calculate the financial impact for each option,” an expert says.

The HSA has become increasingly valuable for future medical expenses, "and the triple tax benefit simply can’t be ignored,” an expert says.

Clients can void overspending by seeking out sales and discounts to lower their food and entertainment costs.

While it’s recommended they have at least three sources when they retire, just 6.8% of savers have done so, according to a report.

A recent study found American workers would face better retirement prospects if the federal government adopts certain public policy changes.

Failing to pay taxes on side-gig earnings and keeping faulty records of business-related expenses must avoided to prevent an excessive tax burden.

The accounts will be managed through Wealthscape, allowing advisers access to their client’s finances to help manage rising healthcare costs.

Contributing to these accounts makes sense for clients who anticipate higher tax rates in the future.

They are triple-tax advantaged, but also introduce significant challenges — especially for life partners with multiple accounts.

Female clients should start as early as possible and take advantage of the employer match, contributing at least 15% of their income.

One tip for younger clients is to create multiple income streams that are subject to varying tax treatments.

Those in the workforce will not owe taxes on rollovers to traditional retirement accounts, but will face consequences using the strategy with a Roth.

Clients with children are advised to start saving early in a 529 plan to take advantage of the “tax-free or tax-deferred growth.”