Bogleheads,
For the last several years, I've been in the enviable position of being able to max all of the below accounts:
- 401k
- HSA (never spent, invested in VTI)
- Roth IRA for self and spouse
- Megabackdoor Roth IRA for self
Due to changing life circumstances, we will not be able to max everything in 2025. I will fall short of being able to max the MBD Roth. My tax rate in 2025 is likely to be higher than my tax rate in retirement so the 401k and HSA are priorities. Below is my current thinking:
- 401k - Max
- HSA - Max, but pay 2025 health care expenses from here
- Roth IRA - Max
- MBD Roth - Whatever is left
Although I've never spent from the HSA before, my thinking with this approach is that I'll still be able to take advantage of the pre-tax benefits of the HSA by maxing contributions, but by spending from the account I'll be able to increase my MBD Roth contributions by the same amount. This effectively gives me the triple tax advantaged treatment of the HSA but without the requirement to spend it on healthcare expenses to avoid taxes upon withdrawal from the Roth.
I also have access to a LEX FSA. My thought is to fund that only to an amount that I'm absolutely sure to spend on dental/vision and withdraw the rest of dental/vision and medical from the HSA.
Any holes in this approach? Thanks for reading.
RandomGuy
For the last several years, I've been in the enviable position of being able to max all of the below accounts:
- 401k
- HSA (never spent, invested in VTI)
- Roth IRA for self and spouse
- Megabackdoor Roth IRA for self
Due to changing life circumstances, we will not be able to max everything in 2025. I will fall short of being able to max the MBD Roth. My tax rate in 2025 is likely to be higher than my tax rate in retirement so the 401k and HSA are priorities. Below is my current thinking:
- 401k - Max
- HSA - Max, but pay 2025 health care expenses from here
- Roth IRA - Max
- MBD Roth - Whatever is left
Although I've never spent from the HSA before, my thinking with this approach is that I'll still be able to take advantage of the pre-tax benefits of the HSA by maxing contributions, but by spending from the account I'll be able to increase my MBD Roth contributions by the same amount. This effectively gives me the triple tax advantaged treatment of the HSA but without the requirement to spend it on healthcare expenses to avoid taxes upon withdrawal from the Roth.
I also have access to a LEX FSA. My thought is to fund that only to an amount that I'm absolutely sure to spend on dental/vision and withdraw the rest of dental/vision and medical from the HSA.
Any holes in this approach? Thanks for reading.
RandomGuy
Statistics: Posted by RandomGuyOnInternet — Sun Aug 11, 2024 10:09 pm — Replies 1 — Views 263