: Like FSAs, HSAs are tax-free on both contributions and withdrawals for qualified medical expenses. (They’re also free of FICA tax if part of a cafeteria plan but not if you make a post-payroll deposit into an HSA.) Unlike FSAs, you can roll over any unused amounts to future years and they can eventually be withdrawn for any purpose penalty-free after age 65. This can make them a hybrid health/retirement savings account and given the high probability of health expenses in retirement, you may even want to invest the money and let it grow tax-free for that purpose. Pitfalls to Avoid
: The penalty for non-qualified withdrawals has recently been increased to 20%, which is higher than the 10% early withdrawal penalty from retirement accounts, so this should be among the last money you touch for non-health related expenses.
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