Invest in HSA or 401K?

Question

Is it better to invest max amount into your HSA or put it into your 401k. I lowered my 401K so I can max out my HSA. With that I can put in tax free and take out tax free for medical expenses

If you can max out your HSA and invest it tax free when you take it out. Isn't it a better plan then a 401K?

The Health saving account is not like the Flex. You can let it invest for as long as you want.

The HSA you can leave the money in there from year to year and then if you quit your job or whatever you can let it grow till retire and use it tax free for all medical expense and premiums. That is going to be 20 - 40% of your retirement expense

Answer 1

If you can't max out both then I think you are doing it right. The hsa is deductible, the income it earns is not taxed and, as long as you pay qualified medical expenses, it isn't taxable on withdrawal
In retirement the hsa acts in a similar fashion to a Roth account in that you can use it post retirement also.
Good move.

Answer 2

401k is really a long term investment vehicle for retirement. hsa just a shorter term parking place for money for health insurance with tax breaks. If prioritizing the two, would put in 401k. Also, HSAs may well go way of the dinosaur depending upon if/what type of national health insurance we probably end up with.

Answer 3

You must anticipate a lot of medical expenses. What happens to the HSA when you quit your current job? Can't roll it into an IRA....I think therein lies your long term reason for choosing to fund the HSA appropriately rather than using it for an investment vehicle.

Answer 4

HSA nothing like a 401k - can't compare. HSA money lost if don't use - not an investment. 401k is THE option

Answer 5

Only put into your HSA what you are reasonably sure that you will need. Put the rest in your 401k.