2. Health savings account (HSA) distributions
Also known as HSA, a health savings account is probably the most appreciated retirement account. It’s so valuable because it provides a ‘triple tax benefit.’ However, you could only access it if you opt for a high-deductible health insurance plan.
Again, you’ll have to respect IRS rules. If everything goes smoothly with your HSA, you’ll never have to pay federal taxes on your income. Virtually every single contribution is tax-deductible, and the fund grows tax-free too.
Plus, if the money is used for medical expenses, you’ll also benefit from tax-free withdrawals. But, the best is yet to come: if you opt for an HSA, there’s no required minimum distribution. Plus, the taxman agrees with a wide range of treatments and procedures paid from HSA accounts.
From dental care, surgery, and insulin to prescription drugs and physical therapy, health savings account covers many things while keeping Uncle Sam’s hands off your income.
