Health savings accounts enjoy tax-deductible contributions and tax-free distributions for qualified health care related expenses. Think you might have some medical expenses in retirement? Max out contributions to your HSA now. In retirement, you can withdraw funds from the HSA to pay for medical expenses tax-free. And unlike Flexible Spending Arrangements, you keep all the money contributed to an HSA.
If you have the ability to pay for medical expenses from other funds, preserve your HSA for use in retirement. It’s an opportunity that can cost you if you overlook it.
This is especially important now because elimination of the deduction for making HSA contributions is currently being discussed in Washington’s tax reform bill before the Congress Ways and Means Committee.