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Health Savings Accounts: the Ultimate Retirement Account – Market Update 9/2/2022

Happy Labor Day!
Although most of us think of Labor Day as Summer’s grand finale it was started as a tribute to the American workforce.
The first Labor Day was celebrated on September 5, 1882 in New York City, planned by the Central Labor Union. The Labor Day parade of about 10,000 workers took unpaid leave and marched from City Hall to Wendel’s Elm Park for a concert, speeches, and a picnic. Today we continue by taking a holiday to honor and celebrate the contributions and achievements of the 155 million men and women who are in the U.S. workforce. This is going to be one of the most beautiful Labor Day weekends on record so get outside and celebrate!
As a continuation of our tax reduction series we are going to go over the basics of the Health Savings Account, really the best tax deal out there when it comes to retirement savings.

Health Savings Accounts: The Ultimate Retirement Account

The first account you should open and fund is not an IRA or 401k. If you qualify, your first retirement account should be a Health Savings Account (HSA). Retirement or not, everyone who qualifies should have an HSA. The HSA is the only tax-advantaged account that gives you both a tax deduction for the money you put in and tax-free withdrawals.

What’s an HSA?

An HSA, like an IRA, is a tax-advantaged savings account but for healthcare expenses. It is paired with a high-deductible insurance plan.

Here’s the Basics:

  • You must have insurance with a minimum annual deductible of $1,400 for self-only coverage ($2,800 for family coverage), and a maximum annual deductible of no more than $7,050 for self-only coverage ($14,100 for family coverage).

  • You should be in good health as a high-deductible insurance plan isn’t suitable for someone who needs lots of expensive medical care.

  • HSA contributions are 100% tax-deductible.

  • Employers, employees, and the self-employed can all contribute to HSAs and all are tax-deductible up to the annual limits.

  • Employee HSA contributions are excluded from your taxable income and FICA taxes.

  • The 2022 HSA contribution limits are $3,650 for individual coverage and $7,300 for family coverage.

  • If you’re age 55 or older you may make an additional contribution of up to $1,000 per year to catch up.

  • You can contribute to your HSA regardless of your income.

  • The money in the HSA rolls over each year and grows tax-free.

  • You may invest the HSA money in money market accounts, certificates of deposit, stocks, bonds, mutual funds, Treasury bills, and notes.

  • You can make withdrawals from your HSA at any time.

  • You are not required to take any distributions from your HSA, at any age.

  • As long as your spouse is the designated beneficiary of your HSA, when you die it becomes your spouse’s HSA and no taxes need be paid. With any other beneficiary the account stops and its fair market value becomes taxable to that beneficiary.

  • You pay no tax on distributions you make from your HSA to pay for qualified medical expenses for yourself, your spouse, or your dependents.

  • There is no deadline for withdrawal for expenses that you incur after you established your HSA. You can reimburse yourself years after an expense occurs.

  • Medical expenses include a broad category of health care expenses including vision and dental expenses, acupuncture, medical massage, over the counter medications, feminine products, and even care for service animals. Here’s an extensive list from the IRS: HSA Expenses.
A couple that opens an HSA at age 50 could have over $200,000 in their account by the time they reach age 65. It is estimated that an average retired couple in the US will need at least $300,000 to cover health care expenses. So start maxing out your HSA asap! Please contact me with any questions and if I don’t know the answer, I will put you in touch with a tax expert who does.
The market is changing! Here’s the numbers from our local market this week:
We had 1 new condo and 4 new home come onto the market this week. We currently have 34 active condos ranging from $377,000 to $3,100,000; the median condo price is $831,500. We currently have 48 active homes on the East Shore ranging from $1,149,000 to $64,500,000 with the median price of $2,899,999 up another $25,001 from last week. Here’s a year to date local update:

Local East Shore Lake Tahoe, Nevada Stats – All Year to Date

Total Sales YTD:
Condos: 66 (↓13% YOY) | Homes: 60 (↓48% YOY)
The Median Sales Price:
Condos: $687,500 (↑2% YOY) | Homes: $1,649,500 (↑3% YOY)
Number of Sales Over $1 Million:
Condos: 15 = 22% (↑8% YOY) | Homes: 51 = 85% (↑6% YOY)
Highest Priced Sale:
$5,665,500 (↓6% YOY) | Homes: $32,000,000 (↑52% YOY)
Median Price Per Square Foot:
Condos: $594.24 (↑17% YOY) | Homes: $626 (↑2% YOY)
Median Days on the Market:
Condos: 71 (↑37% YOY) | Homes: 76 (↑8% YOY)
List to Sell Price:
Condos: 98% (↓6% YOY) | Homes: 98% (↓3% YOY)
Price Reductions this Week:
Condos: 7 | Homes: 5
As you can see from the numbers inventory is not increasing and sales prices haven’t dropped. Houses are sitting on the market longer and some sellers are getting weary but the market has already started to shift again. We have had more showings and escrows over the past couple weeks and the economy is proving stronger than was projected. It is a perfect time to sell as prices are still up and inventory is still low but it is also a better time to buy as houses are sitting on the market longer and the bidding wars have mostly ended.
If someone you care about needs guidance or recommendations, please share our contact information as we are honored to be able to help! If you would like to receive our in-depth market update or would like an evaluation of your property’s value we would love to hear from you! We’ve put together some information below that we think you’ll find useful. If you have anything you want to share with our community please let us know so that it can be included in future newsletters.

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