You can use your HSA savings to make approved investments, including IRA-eligible gold, silver, platinum, and palladium. When you withdraw deposited funds from your HSA, you are fined 20% if you are under 59½ years of age and 10% if you are over 59½ years of age. Profits from HSA investments can be withdrawn at any time without penalty. The answer to that question is maybe.
Many HSA administrators require a minimum balance in your account before you can invest. Check with your HSA administrator to see if your HSA requires a minimum balance before you can invest. Remember, though, that just because you can invest your HSA money doesn’t necessarily mean you should. The IRS allows HSA rollovers once a year, so customers interested in building an individual portfolio can transfer the funds from their workplace account to a self-managed HSA if they’re interested in investments that aren’t available in their workplace HSA.
When invested, HSA funds can essentially become an additional spending account in retirement that customers can use along with other retirement funding sources, such as a Roth IRA or Social Security. Those who need their HSA funding to cover ongoing medical expenses, or those expected to incur over the next few years, are likely better off keeping some or all of their HSA in cash. An analysis by Morningstar found that funds invested in an HSA could potentially triple within 20 years, making the balance 18% higher than the same assets in a 401 (k) or IRA account and more than 30% higher than that in a taxable account. If you offer a high-deductible health plan combined with an HSA, this is the time of year to remind employees of the benefits of setting aside pre-tax income for healthcare needs they face in retirement — the real treasure at the end of their career rainbow.
While most employer-linked HSA accounts only offer fund or cash investments, there are also self-directed HSAs that allow account holders to invest similar to a self-directed IRA. Investors with a longer time horizon in particular have the option to invest in assets such as equity funds, which may be volatile in the short term but offer higher returns in the long term.
