@DanielV01
I beg to differ ...
The FICA tax is comprised of Social Security and Medicare taxes, and this combined tax is typically 15.3% (the Social Security tax is 12.4% on all wages up to $132,900, and the Medicare tax is 2.9% on all wages, with an additional 0.9% for employees with wages higher than $200,000). Employers and employees split the tax, so each typically pays 7.65%.
When you contribute to a 401(k) or IRA, those contributions are subject to FICA taxes, regardless of whether you have a traditional or Roth plan. With an HSA, though, you never have to pay FICA taxes on contributions done via payroll withholding through your employer’s Section 125 plan, and neither does your employer. For each HSA contribution, that’s an extra 7.65% back for you and for your employer!
Let’s break that down. If you contributed $500 each month to a 401(k), you’d have $6,000 in the account by the end of the year. If you contributed $500 each month to an HSA via payroll withholding, you’d have the same $6,000 in your account at year’s end. However, since you didn’t pay FICA taxes on those HSA contributions, you’d have an extra $460 in take-home pay by the end of the year. You can then contribute that extra $460 of annual FICA savings into your HSA; over 40 years, those FICA savings alone could grow to over $75,000*!
https://healthsavings.com/hsas-best-way-save-retirement/#:~:text=With%20an%20HSA%2C%20though%2C%20yo...!
