HSA (Health Savings Account)

An HSA is a tax-advantaged savings account you can only contribute to if you're enrolled in a qualified high-deductible health plan (HDHP). Money goes in pre-tax, grows tax-free, and comes out tax-free when spent on qualified medical expenses. It's the only account in the tax code with all three benefits.

2024 contribution limits are $4,150 individual / $8,300 family, with a $1,000 catch-up if you're 55 or older. Unused money rolls over year to year — no "use it or lose it" — and the account belongs to you, not your employer, so it moves when you change jobs. Many employers seed the HSA with $500 to $1,500 per year as part of the benefits package, and some let members invest balances above a threshold (usually $1,000 to $2,000) in mutual funds. After age 65, HSA funds can be withdrawn for any purpose at ordinary income tax rates, functioning like a second 401(k). The catch: you must be on an HDHP the whole time you're contributing, and Medicare enrollment ends HSA eligibility.

The takeaway: if you're on an HDHP, max the HSA before contributing beyond the match on your 401(k). Triple tax-free is mathematically the best account you can hold.