This seems like something to force savings, which some people need, but I don’t. It’s just a transfer from a tax free restricted account to a taxable brokerage, so I guess I am giving up 15% LT gains over time.
I rarely use it at the Grocery or even Pharmacy
But for MD, DDS, Lab Tests…
I pay off using the card. Maybe no optimal, but sure is easy.
I believe when I read the comparisons, the arbitrage of money going in tax-free, then coming out tax-free after years of growth was ideal, even at the expense of paying from your taxable money today.
At least, assuming you are maxing retirement vehicles. Surely it gets less valuable if you’re saving less in tax-advantaged vehicle to pay for expenses today
Any issues with the receipts fading over time? I’ve had some of my receipts lose all their visible ink. Maybe due to sunlight exposure.
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maybe a bit
I guess if the IRS audits me that could come up if it happens
otherwise it doesn’t matter because I’ve written enough of a record to take the reimbursement anyway
assumption - you can afford to pay for your qualifying medical expenses now even if outside the HSA.
then you leave the HSA to accumulate tax free as long as possible while saving receipts. in retirement, you file those old receipts and the proceeds are tax free “income”.
reality for me: i leave my HSA to accumulate and don’t save current receipts. I project to have enough qualifying expenses in retirement anyway that the w/d from the HSA i do on those contempraneous charges will be fine. I just want the HSA balance to get as large as it can.
I just pay for HSA expenses out of the account as they occur, which so far is pretty negligible. (Account is about $75K). If you need $100 I guess you’re asking do I want $100 tax free now or do I want the $100 in the future while I let the $100 grow tax free. I’ll worry about this decision when it’s REAL dollars, not chiropractor visits. Knowing me I’d probably lose the receipts but my wife wouldn’t.
Same. I assume I will have medical expenses as I age (as do most folks) so I’m not concerned about saving receipts for many years. I just let my HSA grow tax deferred for now. In the unlikely event I don’t have lots of medical expenses as an old fart, the worst case scenario is paying some tax on it when I make non medical withdrawals sometime after I hit 65.
Take digital pictures of your receipts and save them in a folder. A Clark Howard suggestion is to use the receipt amount as your filename. Have separate folders “redeemed” and “not redeemed”
Fortunately, this isn’t an issue I need to deal with. I think if I did, I’d scan the receipts into a file on a quarterly or annual basis depending on how frequently I got receipts.
I have never touched my HSA account
I plan to use it to pay for Medicare Premiums after age 65
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My parents gave my kids some money for Christmas - I think I have funded their 529 accounts such that I don’t want to tie up more money into the accounts as they may not use it all. I might have one go to a 4 year state school and another a couple years in a community college. The 529 accounts could cover about two lots of 4 years at the state university.
So now, what to do with the christmas gift? Is there any point to keeping their assets low considering financial aid, or are they pretty much going to qualify for 0?
What is a good place to otherwise put the money? Checks were written out to me, so technically it is mine for now to do just about anything with, at least from the government perspective. My parents would not be happy if I spent it on myself.
how substantial? Shouldn’t the kids get something fun with it?
I havent applied for financial aid in a long time, but i don’t believe they can totally seperate themselves from your wealth
I think there is a point to keeping their assets low because your assets are weighted less than theirs.
You’d probably need some kind of FAFSA calculator to see if they’re going to get 0 anyway.
https://studentaid.gov/aid-estimator/
According to Google AI
Student assets are assessed at up to 20%, significantly impacting aid compared to parent assets (up to 5.64%).
I would agree they should get some spending money and put the rest in a separate account, under your name if you choose, but with the understanding that they each get half for college costs at some point.
Unfortunately I can’t give investing advice as to what type of account. I personally wouldn’t do anything too risky if your kids are almost college age.
5k each. So more than a teenager needs too spend on something fun, with the exception of a car when that time comes. That could be an option though to add to a budget that I was planning to put towards a car.
I expect this will be an annual gift. My parents had been giving them similar amounts previously thar have gone to their 529 accounts.
But really, I think this should be college money, or something to help them transition to living on their own afterwards. Coming out of college with 50k saved would give them a pretty good head start on that.
I put some numbers into that and got the 5500 federal loan option, and assume that is effectively 0 in that everyone will get that.
the folks on this board are likely all in the fortunate spot of receiving $0 in need based grants/reductions. loans and grade-based, sure.
yup, starting assumption and confirming.
I will not repeat the mistake the was made when I was their age and invest a significant part of it into the hot stocks of the day (WorldCom, Lucent Technologies).
When I was a young kid, my grandparents gifted each of us a small amount of a single stock. They were generally blue chips, but each had just one. Some of us did pretty well with it (I had GE which did great), others not so much (a sister that had Xerox).
Is this in a UTMA account? Seems like a good way to structure these type of gifts, where the money belongs to the child but is managed by the custodian (usually parent) until they are 18 or 21 (varies by state I think)
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I think it is a nice idea.
My grandfather bought some shares in a grain company when he homesteaded in Saskatchewan around 1905. The share certificate was very elaborate and was passed down from generation to generation. My nephew has it now and, unlike your stock, the shares may be worthless now as they were never exchanged for successor shares. Viterra is probably the current successor. However the certificate is a lovely souvenir of Canadian history.
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