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Welcome to this session of grand rounds, a collection of posts I have discovered in the blogosphere and have found of interest and hope you do too.
This offering of Grand Rounds looks at articles from around the web that deal with retirement/tax-advantaged accounts.
One of my favorite tax-advantaged accounts is the Health Savings Account (HSA).
Used correctly the HSA acts like a “Stealth IRA” and is the only tax-advantaged account that can be triple tax free.
Most tax-advantaged accounts require you to pay tax at some point:
- ROTH IRAs you pay the tax upfront as your contribution is with post-tax money.
- Any gains in the account will be tax-free upon withdrawal.
- Traditional IRA/401k accounts have you contribute with pre-tax dollars but then tax you on the back end when you withdraw.
The HSA allows you to contribute with pre-tax dollars, any growth in the account is tax-free, and then if you withdraw funds for a qualified health expense, the withdrawal incurs no tax.
Financial Samurai appears to agree with my approach in, “Using A Health Savings Account As A Retirement Vehicle.”
The HSA does indeed sound like a perfect vehicle for retirement while you are alive.
The key word in that statement is alive, because there are some tax implications regarding HSA accounts when you die.
FI Physician sounds this warning about individuals who have large HSA accounts stating, “Don’t Die with an HSA.”
Most people do not love taxes.
There are some taxes I particular do not like because it feels like a double taxation (taxing on an asset that has already been taxed).
Take the estate tax, for example.
I build up my estate using money that has already been taxed.
When I die there is a potential that the government gets another bite at the tax apple.
Financial Ducks In A Row tries to minimize double taxation in the post, “Double Double, Toil and Trouble: Avoiding Double Tax on an Inherited IRA.”
Automation has made our lives easier.
Machines wash our clothes, robots are seen vacuuming our floors.
Well automation doesn’t just have to apply to your household chores.
Just setting your retirement contributions on auto-pilot can have some massive beneficial effects years later.
Financial Success MD elaborates on this with, “The Incredible Power of Automating Your Retirement Investments.”
One of my financial regrets was not taking advantage of investing in a ROTH IRA while I was a resident.
I was making a lot less money and did not have to jump through any hoops to be able to contribute to a ROTH IRA directly.
Also I was in an incredibly low tax bracket compared to my current one so the money going in would also have had a smaller bite taken out.
I have taken advantaged of backdoor ROTH conversions in the past but the ability to continue to do this is up in the air due to possible legislation.
But for now if you can get money in a ROTH IRA, directly or through the backdoor method, I feel it is something you should take advantage of.
Smart Money MD definitely agrees with me in, “Why A Roth IRA should be considered in every physician household.”
Hope you enjoyed the reading material.
Have a great rest of the week.
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