Maximizing Your Fidelity Health Savings Account: Tips and Strategies
Introduction
A Health Savings Account (HSA) is a great way to save money for current and future medical expenses while also reducing your taxes. If you’re a Fidelity HSA holder, you may wonder how to make the most of your account. In this article, we’ll explore some tips and strategies to help you maximize your Fidelity HSA.
Understanding Your Fidelity HSA
The first step towards maximizing your Fidelity HSA is to understand its features and benefits. A Fidelity HSA is a tax-advantaged account that allows you to save money for qualified medical expenses. You can contribute pre-tax dollars to the account, and the earnings on your contributions grow tax-free. Plus, withdrawals for qualified medical expenses are also tax-free.
Maximizing Your Contributions
One of the best ways to make the most of your Fidelity HSA is to maximize your contributions. For 2021, the maximum contribution limit is $3,600 for individuals and $7,200 for families. If you’re over 55, you can make an additional catch-up contribution of $1,000.
To maximize your contributions, consider contributing the maximum amount allowed each year. If you can’t afford to contribute the full limit, try to contribute as much as you can. Every dollar you contribute to your Fidelity HSA reduces your taxable income, which means you’ll pay less in taxes.
Investing Your HSA Funds
Another way to maximize your Fidelity HSA is to invest your funds. Unlike other HSA providers, Fidelity allows you to invest your HSA balance in a variety of funds, including mutual funds, exchange-traded funds (ETFs), and individual stocks.
Investing your HSA funds can help them grow at a faster rate than just leaving them in a cash account. However, it’s important to choose your investments wisely and consider your risk tolerance and investment goals.
Using Your HSA Strategically
To get the most out of your Fidelity HSA, it’s essential to use it strategically. That means thinking ahead about your current and future medical expenses and using your HSA funds to pay for them.
One way to use your HSA strategically is to save your HSA funds for retirement. Unlike Flexible Spending Accounts (FSAs), HSA funds roll over from year to year, so you can accumulate a significant balance over time. By saving your HSA funds for retirement, you’ll have a reliable source of funds to cover medical expenses in your later years.
Conclusion
Maximizing your Fidelity HSA is an excellent way to save money on taxes while setting aside funds for current and future medical expenses. By understanding your Fidelity HSA’s benefits, maximizing your contributions, investing your HSA funds, and using your HSA strategically, you can make the most of your account. Remember to consult with a financial advisor or tax professional for personalized guidance based on your unique financial situation.
