(PRWEB) April 13, 2005
Defer Taxes using IRAs, SEPs, 401kÂs, and now Health Savings Accounts.
There are several investment options tax-payers can use to lower their taxable income, and most can be funded as late as April 15. In addition to IRAs, and 401kÂs, many individuals now also have the opportunity to put money aside in a Health Savings Account.
Health Savings Account (HSA)
Health Savings Accounts became available in the beginning of 2004, and are the latest way you can shelter your income from taxes. They can be opened by anyone with a qualifying high-deductible health insurance plan. For 2005 there is a contribution limit of $2,650 for individuals, and $5,250 for a family. Any money deposited in the account is tax deductible, and grows tax-deferred. The special advantage HSAs offer is the money can be withdrawn from the account tax-free at any time to pay medical expenses. It is for this reason why many financial advisors recommend the HSA be the first of your tax-deferred accounts that are fully fund each year.
Individual Retirement Account (IRA)
Anyone with taxable income is eligible to open an IRA. For 2004, you can put away $3,000 in your IRA. If you designate your IRA as a Roth IRA, you must fund the money with after-tax dollars, but you never have to pay taxes on the money when it is withdrawn.
Simplified Employee Pension (SEP)
SEPs allow small business owners, and other self-employed individuals to place as much as 25% of their income into their SEP account, where it will not be taxed until it is withdrawn. The maximum annual contribution is $41,000.
Many employers offer 401(k) retirement accounts funded through pre-tax payroll deductions. These plans allow you to contribute a percentage of your pay, with a maximum pre-tax contribution dollar amount of $14,000.
Money for Retirement and Medical Expenses
Health Savings Accounts have now joined IRAs, SEPs, and 401kÂs as the latest way to defer paying taxes on your income. Though all of these accounts grow tax-deferred until retirement, a Health Savings Account is the only one of these tax-advantaged savings vehicles which also allows tax-free withdrawals when the money is used for medical expenses.
For more information about how HSAs work and instant quotes on qualifying high deductible health insurance plans, please visit http://www.HSAforAmerica.com, or call 866-254-5121.
About HSA for America:
HSA for America is a nationwide brokerage firm specializing in individual and family health insurance plans that are qualified to work with Health Savings Accounts. HSA for America represents many different insurance companies, offers instant quotes, online applications, and comparisons of HSA administrators. HSA for America provides this information as a quick reference, and it is NOT our intention to offer or provide tax advice.
HSA for America
Toll-Free Phone: (866) 254-5121
Toll-Free Fax: (866) 284-0082
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