1. HSAs also have a weird "feature" - you have an unlimited reimbursement time limit. If I have $100 in an HSA account and spend $100 on an HSA-eligible medical procedure, I don't have to submit the receipt right away and get my $100 back. I can invest the $100 and then submit my $100 reimbursement sometime in retirement. It should only take 15-20 years for the investment to grow beyond the marginal tax + inflation for waiting, and then all capital gains beyond that point are free money (from the government?).
2. People compare Trad. IRA and Roth IRA a lot, but I've never seen any that consider the effects of the avoided current tax payments of a Trad. IRA. Ceteris paribus, if you are putting $6000 in an IRA this year, you have an extra ~$1500 in your pocket if you choose the Trad. IRA (because you avoided paying taxes right now). What do you do with that money? I'd argue that a proper comparison requires that you put that money in a non-tax-advantage account. That makes a difference, especially if you think you will have an early retirement situation!
3. In addition to the various states that have no income tax at all, there are a good number that do not tax retirement distributions at all. While the Feds may consider it as earned income, depending on where you live, your effective tax rate in retirement may be significantly reduced - also something that should be considered when comparing Trad. IRA with Roth IRA.
Comments
1. HSAs also have a weird "feature" - you have an unlimited reimbursement time limit. If I have $100 in an HSA account and spend $100 on an HSA-eligible medical procedure, I don't have to submit the receipt right away and get my $100 back. I can invest the $100 and then submit my $100 reimbursement sometime in retirement. It should only take 15-20 years for the investment to grow beyond the marginal tax + inflation for waiting, and then all capital gains beyond that point are free money (from the government?).
2. People compare Trad. IRA and Roth IRA a lot, but I've never seen any that consider the effects of the avoided current tax payments of a Trad. IRA. Ceteris paribus, if you are putting $6000 in an IRA this year, you have an extra ~$1500 in your pocket if you choose the Trad. IRA (because you avoided paying taxes right now). What do you do with that money? I'd argue that a proper comparison requires that you put that money in a non-tax-advantage account. That makes a difference, especially if you think you will have an early retirement situation!
3. In addition to the various states that have no income tax at all, there are a good number that do not tax retirement distributions at all. While the Feds may consider it as earned income, depending on where you live, your effective tax rate in retirement may be significantly reduced - also something that should be considered when comparing Trad. IRA with Roth IRA.