BillM223
Expert Alumni

Deductions & credits

I congratulate you on your understanding of HSAs.

 

1. After you turn 65, the HSA becomes like a funny IRA. While you can still reimburse yourself tax-free for medical expenses, you can also take distributions with no penalty after age 65 (you pay regular income tax, of course, just like with an IRA). 

2. There is no RMD requirement with an HSA, unlike with an IRA.

3. Some HSA custodians permit you to invest in a variety of investment vehicles: stocks, mutual funds, whatever the custodian allows. So maybe it is time to look at another HSA custodian.

4. It is hard to imagine a situation in which using Schedule A beats an HSA. If your marginal tax rate is 24%, then each dollar of expense IN EXCESS OF 7.5% of your AGI is worth 24 cents. But spending the same money from the HSA is tax-free.

 

Why don't you take the distribution from your HSA and take the Standard Deduction? It's sort of double-dipping - the Standard Deduction covers a "standard" amount of medical expenses, and the same expenses are reimbursed by the HSA.

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