Clients eager to use the benefits of health savings accounts must steer clear of all-too-common mistakes that could bring large tax payments or big penalties, according to experts.
Financial advisors and tax professionals can help clients avoid pitfalls by reminding them that the HSA advantages of duty-free saving, investment growth and withdrawals come with some strict guidelines, planner Kevin Thompson of Fort Worth, Texas-based 9i Capital Group and Health and Welfare Sales Consultant Cat Torres of Wakefield, Massachusetts-based Sentinel Group told Financial Planning. Potential mishaps include the most typical blunder around HSAs — distributing money toward costs that don’t fit the IRS definition of “qualified medical expenses” — and planning for a tax hit if a non-spouse beneficiary inherits an account.
