You can add additional funds to your HSA, above what you may have withheld, and transfer them to an investment account. Granted the investment account options from HSA Bank are limited but after separation from the company you can transfer those funds to Fidelity or some other account where you have a lot of investment options. This money is yours to keep and grows tax free and is not taxed on withdrawal IF used for allowed medical expenses.
When taking early retirement in 2018 my account was $53000. I paid Cobra health insurance premiums and later my Part B Medicare premiums using the HSA. Now in 2025 my HSA balance has grown to $90000 despite these significant withdrawals. (Note that withdrawals for normal health insurance premiums such as Obamacare or supplemental Medicare insurance premiums are not tax free.)
If you absolutely need the money you can withdraw it and pay the taxes, you are free to use it as you see fit.
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@xd
you get the capital gains each year and not just in retirement. Try asking your Turbotax. It also does not know how to handle.
an option: relocate in retirement to a State that has no State income, then capital gains are subject to taxes
Unlike the federal government, California does not treat the HSA as a tax-exempt account. This means any interest, dividends, or capital gains generated by the investments within your HSA are taxable and must be reported on your state tax return, similar to a standard brokerage account.
Reporting: You will need to calculate these earnings from your HSA statements and report them on Schedule CA.
The trouble is how to get the base as it is not reported on the HSA forms. Nor if short term or long term! It is a mess
I guess saving for a nice retirement at 60 after 40 years of hard work is now considered hoarding money by some and I should instead work till age 80 and live check to check until I pass away in my cube. I’ve also learned to not argue with people and that nobody else wants to see me do well except me. So you’re right. Have fun with that.
Keep hoarding money! You may not live long enough to spend it or do any good with it
Good advice to max out the HSA contribution since it's better than a 401k or even Roth 401k. But the amount you can put in there tax free is limited every year to a relatively low amount. I also max out my 401k including catch up to the limit. I would recommend this highly and live the required more modest life to do so if you can. If you're not doing so now, start by adding the entire raise % you just got to the 401K contribution now and just keep living as you have been. And of course, please use your bonus to top off your emergency fund which should equal 1 year of your net pay at minimum and preferably 1 year gross like mine is now. After 10 years of applying this and saving 1/2 my gross income I can tell you I'm not worried about a layoff very much. Nobody at work suspects I'm about to hit my 2nd million already in my early 50's. Certainly not by my vehicle. Just a note of caution that another 50% market crash is very possible starting like right now. Invest accordingly for your age. Kudos if you are also a gold and silver stacker like I've been over the years. It's paying off tremendously. The secret to having a lot of wealth is actually figuring out how to keep most of it and not spend it.
Take care of your health now so you don’t need to rely on a rigged system to do it for you later
if you are in California, hsa capital gains are taxed, but hsa do not report the base nor if short or long term gains.
a future headache in retirement.
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