(PRWEB) April 13, 2005 -- Defer Taxes using IRAs, SEPs, 401ks, and now Health Savings Accounts.
There are several investment options tax-payers can use to lower their taxable income, and most can be funded as late as April 15. In addition to IRAs, and 401ks, many individuals now also have the opportunity to put money aside in a Health Savings Account.
Health
Savings Accounts became available in the beginning of 2004, and are the
latest way you can shelter your income from taxes. They can be opened
by anyone with a qualifying high-deductible health insurance plan. For
2005 there is a contribution limit of $2,650 for individuals, and $5,250 for
a family. Any money deposited in the account is tax deductible, and
grows tax-deferred. The special advantage HSAs offer is the money can
be withdrawn from the account tax-free at any time to pay medical expenses.
It is for this reason why many financial advisors recommend the HSA be the
first of your tax-deferred accounts that are fully fund each year.
Individual Retirement Account (IRA)
Anyone
with taxable income is eligible to open an IRA. For 2004, you can put
away $3,000 in your IRA. If you designate your IRA as a Roth IRA, you
must fund the money with after-tax dollars, but you never have to pay taxes
on the money when it is withdrawn.
Simplified Employee Pension (SEP)
SEPs
allow small business owners, and other self-employed individuals to place
as much as 25% of their income into their SEP account, where it will not be
taxed until it is withdrawn. The maximum annual contribution is $41,000.
401(k)
Many
employers offer 401(k) retirement accounts funded through pre-tax payroll
deductions. These plans allow you to contribute a percentage of your
pay, with a maximum pre-tax contribution dollar amount of $14,000.
Money for Retirement and Medical Expenses
Health
Savings Accounts have now joined IRAs, SEPs, and 401ks as the latest way to
defer paying taxes on your income. Though all of these accounts grow
tax-deferred until retirement, a Health Savings Account is the only one of
these tax-advantaged savings vehicles which also allows tax-free withdrawals
when the money is used for medical expenses.
About HSA for America:
HSA
for America is a nationwide brokerage firm specializing
in individual and family health insurance plans that are qualified to work
with Health Savings Accounts. HSA for
America represents many different insurance companies, offers instant
quotes, online applications, and comparisons of HSA
administrators. HSA for America
provides this information as a quick reference, and it is NOT our intention
to offer or provide tax advice.
