Looking to estabish a Self Directed IRA, Self Directed Retirement Plan, or Real Estate IRA? Next Generation Trust Services, a self directed IRA administrator based out of Northern New Jersey, presents the basic steps to filling out the application paperwork to get your self-directed retirement account open! Control Your Future, Today!
HSA (Health Savings Account)
With tax day creeping around the corner, the IRS released a whole new batch of tax publications for the tax-payer at the beginning of this year. These publications explicitly detail each type of plan, eligibility, as well as assistance with tax preparation. Most years you can expect simple updates to contribution limits, however this year’s Publication 969reveals big changes to the HSA account, Health Savings Account for High-Deductible plans.
The biggest changes to the HSA for 2011 filing are as follows:
- Changes to qualified medical expenses
- Additional tax rate increased to 20%
Gone are the days of the vague definition of “medical expense”, the days where every receipt for aspirin or cough medicine can be swept into that shoebox labeled “Tahiti”. Tightening up their definitions of what is treated as a medical expense, the IRS has indicated that any amounts paid after January 1st, 2011 shall be considered a medical expense only if the drug requires a prescription, is over the counter and you have prescription for it anyway, or is insulin. Further reading on what is considered a qualified medical expense can be found in IRS Publication 502, Medical and Dental Expenses.
In addition to this clarification, the additional tax for an HSA distribution taken for expenses other than qualified medical expenses (meaning distributions taken for any other reason) has increased from 10% to 20% in addition to ordinary income tax.
Though the above may seem like the IRS took all the fun out of an HSA, the good news is that contribution limits have also increased, allowing eligible members of these plans to further fund their accounts. The new contribution limits are as follows:
- For 2011, single member coverage is $3,050 and family coverage is $6,150.
- For 2012, single member coverage increased to $3,100 and family coverage is $6,250.
For complete contribution limits for all plans, please see our contribution limit sheet.
Much like IRAs, HSAs can be self-directed, are subject to IRS Code 4975 for prohibited transactions, and you may contribute for tax-year 2011 until April 17, 2012. Next Generation Trust Services encourages anyone considering opening an HSA to review IRS Publication 969 and to consult their tax advisor to ensure eligibility. Next Generation Trust Services is not responsible for determining plan eligibility, nor may we provide advice.
Would you like to open an HSA? Contact out office today for further information and be sure to take advantage of our contribution promotion!
With the average US lifespan rising and Social Security becoming questionable for our younger generations, MSN Money asks the question Is your kid saving for retirement?
Donna Freedman at MSN Money reviews the merits of saving early, its impact on learning good money habits, saving for college versus retirement and ensuring a financially stable future for our children. Did you know that there is no age limit on IRAs?
Next Generation Trust offers not only self-directed IRAs, but also specialty plans such as a self-directed Coverdell Education Savings Account (CESA) and Health Savings Account (HSA) to help you get started on the road to financial freedom. Contact our office today for more information on these great plans.
Check this article out, and help your children control their future, today!
A Health Savings Account is an alternative to traditional health insurance; it is a savings product that offers a different way for consumers to pay for their health care. HSAs enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis.
You must be covered by a High Deductible Health Plan (HDHP) to be able to take advantage of HSAs. An HDHP generally costs less than what traditional health care coverage costs, so the money that you save on insurance can therefore be put into the Health Savings Account.
You own and you control the money in your HSA. Decisions on how to spend the money are made by you without relying on a third party or a health insurer. You will also decide what types of investments to make with the money in the account in order to make it grow.
What Is a “High Deductible Health Plan” (HDHP)?
You must have an HDHP if you want to open an HSA. Sometimes referred to as a “catastrophic” health insurance plan, an HDHP is an inexpensive health insurance plan that generally doesn’t pay for the first several thousand dollars of health care expenses (i.e., your “deductible”) but will generally cover you after that. Of course, your HSA is available to help you pay for the expenses your plan does not cover.