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0 pointsauc4y ago0 comments

Yes, I am the writer of this. Thanks for the pointers!

About the "pre-tax" and "post-tax" terminology, you are right, I should change "post-tax" to refer to when distributions are tax-free. I had to keep the table to a certain width, so had to come up with short terminology.

I think calling an HSA "a pre-tax account that is only allowed to spend money on healthcare related items" is fair, because that's how the government refers to it. https://www.treasury.gov/resource-center/faqs/Taxes/Pages/He... "Health Savings Accounts (HSAs) were created in 2003 so that individuals covered by high-deductible health plans could receive tax-preferred treatment of money saved for medical expenses". The rest of your point on HSAs stand though.

IRA - "with an income of $140k, one cannot make ANY contribution, at least directly." Yes, this was a typo, meant it specifically only for Roth.

"One feature not many understand is that at any age, you can convert money from Trad. IRA to Roth, pay the tax" I briefly mention this in the post, but left out details for brevity sake.

"So if you can afford to pay the tax now and wait five years, you can get some or all of your money out of your IRA at any age without penalty." I do not think this is correct in the normal case. You must be 59.5 years of age unless you qualify for an exception. Also, you wouldn't want to take this money out early anyway unless you direly needed to.

For your 529 point, I only hinted at this and could've worded it better, but switching beneficiaries and the $70k limit is relevant if you have a 529 for an unborn child that you are accumulating. I'll reword this.

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laksdjf4y ago· 1 in thread

Having all the info summarized in one page is useful.

> IRAs do not allow access until minimum age 59.5

For a Roth IRA, you can withdraw the contributions, but not the earnings, at any time. For example, if you contribute $5k that gains $100 in interest, you can withdraw the $5k without penalty. If you withdraw the $100, it'll be taxed and penalized.

One source:

> You can withdraw contributions you made to your Roth IRA anytime, tax- and penalty-free. However, you may have to pay taxes and penalties on earnings in your Roth IRA.

https://www.schwab.com/ira/roth-ira/withdrawal-rules

aucOP4y ago

Thanks for the pointer! I see that I was incorrect above.

I added this to the page :)

PopAlongKid4y ago

The two key things I wish to briefly re-iterate:

1) after age 65, the HSA no longer has any restrictions (penalties) related to medical expenses, it works just like a Trad. IRA except that if you do reimburse for medical expenses, the distributions are tax-free.

2) Each conversion from Trad. IRA to Roth IRA starts a five-year timer on that conversion, after which the amount converted can be withdrawn tax and penalty free, just like Roth contributions. So for example a 40-year old who leaves a job and rolls over a 401k balance to an IRA, can then choose to pay tax now (via Roth conversion) and then take out some or all the money penalty free at age 45, which is significantly younger than age 59.5 (for IRA) or 55-and-separated-from-service (for 401k).

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