Originally Posted by
Redbird611
The nice thing about the HSA is that once you're over 65 you can withdraw funds for non-medical expenses without penalty. You'll just have to pay tax like you would on an IRA. If the VEBA program comes to pass my plan is to keep aggressively saving in the HSA. That way if I need the money for medical expenses it is tax free, and if I don't it is at least additional tax deferred retirement investing. I'd naturally use VEBA money first in retirement and keep HSA money in reserve until needed. I'm in about the same demographic as you and to be honest the VEBA sounds like it could be an advantageous tax shelter. At the same time I can understand the heartburn over some of the terms that apparently can't be addressed until the program is running and the IRS is petitioned.
So the last sentence really is the crux of what I'm after. The only parts I'm not a fan of so far are:
1. Potentially accruing WAY more than $50k...more than I'll ever be able to spend? Doubtful considering where things are heading with health costs, but I guess the math needs to be run just the same.
2. More importantly, as we all progress and start surpassing 401c limits, will the 401c excesses be mandatorily directed to the VEBA, which is how #1 would occur. At $1k/year, I'm not really that worried about ending up with too much in the VEBA. At $5k/year does the math change? I assume the principal would be invested and compound over the next 3 decades? How would each individual's basis be accounted for?
It's a good problem to have - contemplating a situation where we have too much money to spend on retiree healthcare. Of course, if that money could be better spent somewhere else...
For me, from what I've read and watched so far, the crux of this comes down to how #2 will be handled by the IRS.