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April in the D!

It is April in the D! Unfortunately it is not the April in the D we have become accustomed to. The Red Wings missed the playoffs for the first time in 25 years and the playoff hopes for the Pistons quickly vanished. The first game of the year for the Tigers was rained out in Chicago and we experienced yet another “spring” snowfall. However, there is one thing remains constant in April – no not the Masters – taxes! Are you taking advantage of every vehicle available to you to reduce your annual tax bill?

As Wayne eluded to in his previous blog, we provide comprehensive tax planning to our clients. One of the most overlooked vehicles across the industry continues to be the Health Savings Account (HSA). An IRA may make sense, but the HSA is that new shiny vehicle in the dealer’s parking lot. I do not know many individuals or families that do not incur medical expenses annually. So, if you are like the majority of American families the HSA may be ideal for you.

1. What is the HSA?
The HSA is a qualified trust or custodial account administered by a qualified trustee, which can be a bank, insurance company, or another IRS approved entity.

2. Why is the HSA so powerful?
The HSA is triple tax differed. Yes, you read that correctly, triple tax deferred. Any dollars in your HSA are yours and will continue to rollover annually. HSA’s are portable if you change employers. In addition, distributions for non-medical expenses can be taken penalty free at the age of 65.

3. How can it be used?
To reduce income taxes, as an investment vehicle, and as medical expense account.

4. What are the contribution rules?
You must be enrolled in a high deductible medical plan. For 2017, the minimum annual deductible is $2,600 and the maximum annual out of pocket expense limit is $13,100. If you have a high deductible medical plan, your contributions will be tax deductible, investment earnings will be tax free, and qualified withdrawals of funds will be tax-free. However, you cannot contribute to an HSA if you do not have a high deductible medical plan.

Before you make that IRA contribution, it may make sense to consider an HSA contribution. HSA’s offer several benefits that are not available to you inside of an IRA. It may be time to consider HSA contributions, but we recommend speaking to a Gainplan professional before altering your savings strategy.

Happy tax season, go Tigers!

This commentary on this website reflects the personal opinions, viewpoints and analyses of the Gainplan LLC employees providing such comments, and should not be regarded as a description of advisory services provided by Gainplan LLC or performance returns of any Gainplan LLC Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Gainplan LLC manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

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