Vanguard to offer HSAs, interest will be increased

As I’ve been saying for a while, advisors need to offer health savings accounts (HSAs) to the plan sponsors clients they have. They can make money on increased assets and their clients get to offer a tremendous employee benefit.

Many plan providers understand that and that’s why they are offering that benefit to the list of the services they provide. Vanguard just announced a partnership with HealthEquity, the nation’s largest independent HSA custodian, to provide plan sponsor clients with a new service integrating health and wealth planning for retirement.

If you’re an advisor, why should you offer HSAs to clients? It’s a tax dream for employees. Participants investing in an HSA enjoy several benefits, including a triple tax advantage: 1) contributions are made pre-tax or are tax-deductible; 2) earnings and interest accumulate tax-free; and 3) withdrawals for qualified medical expenses are also non-taxed. After age 65, account owners can make withdrawals for any expense without a penalty; however, withdrawals used for anything other than medical expenses are taxed as income.

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