Hello there!
I read up on HSAs a month after the last annual enrollment, so I am determined to not miss it this time (in October 2024). So I thought maybe I could clear some things up for myself.
In the Bogleheads wikipage for HSAs, there's this line:
If you are enrolled in a HDHP for only part of the year, the maximum contribution amounts can vary based on several factors; see IRS Pub 969 for specifics.
I then went to try and read IRS Pub 969 and totally got confused by the Last-Month rule and the Testing period; so I'm going to type up a scenario that I think I'd be in, and I would be grateful for any replies or commentaries if my thinking is awry.
For 2024, I would be getting self-coverage HDHP in October, where I can contribute up to $4150 to a HSA. My thinking is, since I am actively looking for better employment [federal, state/county], it is possible that I may not have a HDHP in the next job. Therefore, instead of maxing out the HSA as soon as I can in October, i should... contribute $345 on a monthly basis (4150/12) [less whatever the employer match is; i'd have to read up on that bit].
I just don't want to max out the HSA then have to do additional work when tax time comes because a new job doesn't offer a HDHP. This is where the testing period in the IRS Pub 969 worried me.
As an aside, I've also read up having a HSA while residing in NJ (lucky me). In keeping with having no hassles come tax time, any investments will be Treasury bonds, otherwise it'll be just cash [I can keep track of the interest, etc., easily enough; I don't want to deal with anything more complicated than that.] And uh, also because *cough* I'm pretty much 100% equities *cough*
Plan of action:
1) Enroll in employer's HDHP when October begins , sign up for HSA (I believe it's Health Equity, but I plan to transfer to a Fidelity HSA). [I believe there's a minimum amount I need to keep in HE before
2) Contribute a monthly amount of (4150/12) [minus employer match]
3) Re: new employment
If federal: stick with HSA [enroll in GEHA HDHP]
If state/county: oh well, from what I can tell, there is no HDHP; so i close the accounts.
Else: if I'm stuck in current job, GOTO step 2
Sorry for rant. One question though: From what I understand, a HSA is what one funds pretty early every year (after emergency fund and getting the 401k match). Are people really funding their HSAs as early as possible in the year? That would mean you're pretty certain that you're staying at your current place of employment... well it's my fault, I'm eight years behind >_<
I read up on HSAs a month after the last annual enrollment, so I am determined to not miss it this time (in October 2024). So I thought maybe I could clear some things up for myself.
In the Bogleheads wikipage for HSAs, there's this line:
If you are enrolled in a HDHP for only part of the year, the maximum contribution amounts can vary based on several factors; see IRS Pub 969 for specifics.
I then went to try and read IRS Pub 969 and totally got confused by the Last-Month rule and the Testing period; so I'm going to type up a scenario that I think I'd be in, and I would be grateful for any replies or commentaries if my thinking is awry.
For 2024, I would be getting self-coverage HDHP in October, where I can contribute up to $4150 to a HSA. My thinking is, since I am actively looking for better employment [federal, state/county], it is possible that I may not have a HDHP in the next job. Therefore, instead of maxing out the HSA as soon as I can in October, i should... contribute $345 on a monthly basis (4150/12) [less whatever the employer match is; i'd have to read up on that bit].
I just don't want to max out the HSA then have to do additional work when tax time comes because a new job doesn't offer a HDHP. This is where the testing period in the IRS Pub 969 worried me.
As an aside, I've also read up having a HSA while residing in NJ (lucky me). In keeping with having no hassles come tax time, any investments will be Treasury bonds, otherwise it'll be just cash [I can keep track of the interest, etc., easily enough; I don't want to deal with anything more complicated than that.] And uh, also because *cough* I'm pretty much 100% equities *cough*
Plan of action:
1) Enroll in employer's HDHP when October begins , sign up for HSA (I believe it's Health Equity, but I plan to transfer to a Fidelity HSA). [I believe there's a minimum amount I need to keep in HE before
2) Contribute a monthly amount of (4150/12) [minus employer match]
3) Re: new employment
If federal: stick with HSA [enroll in GEHA HDHP]
If state/county: oh well, from what I can tell, there is no HDHP; so i close the accounts.
Else: if I'm stuck in current job, GOTO step 2
Sorry for rant. One question though: From what I understand, a HSA is what one funds pretty early every year (after emergency fund and getting the 401k match). Are people really funding their HSAs as early as possible in the year? That would mean you're pretty certain that you're staying at your current place of employment... well it's my fault, I'm eight years behind >_<
Statistics: Posted by LastChans — Wed Jul 31, 2024 2:19 am — Replies 0 — Views 34