Stealth IRA Questions

[Gas_Doc]

For those of you who use your HSA as a 'Stealth IRA,' how do you treat the account?

 

Do you ever pull money out of it to pay for current medical expenses, or do you treat it like any other retirement account where you wont use it until you are 60+ and thus pay for all medical expenses out of pocket.

 

Also, do you allocate the investment mix as part of your overall asset allocation or do you treat it like it's a single entity since it can only be used for a specific purpose (namely, healthcare)?

 

Finally, which company do you use for your Stealth IRA?

[jhwkr542]

I never pull money out, just pay cash. With our investment timeline, we have decades for it to grow.

I plan to treat it as part of our investment mix, but it's so small and has such limited good investment choices, I just throw it into a market index fund.

It's through my employer via optum HSA, but it is a convert from Wells Fargo and has poor investment choices.

[janettebournes]

Gas_Doc wrote:

For those of you who use your HSA as a ‘Stealth IRA,’ how do you treat the account?

 

Do you ever pull money out of it to pay for current medical expenses, or do you treat it like any other retirement account where you wont use it until you are 60+ and thus pay for all medical expenses out of pocket.

 

Also, do you allocate the investment mix as part of your overall asset allocation or do you treat it like it’s a single entity since it can only be used for a specific purpose (namely, healthcare)?

 

Finally, which company do you use for your Stealth IRA?

Click to expand...

1) Don't plan on touching it until 60+ and pay for all current medical expenses out of pocket

2) I don't include this as part of my overall asset allocation and am more aggressive with this account

3) Optum HSA

[RDB]

I also do not pull money out. Pay for expenses with cash. I invest it aggressively, 100% total stock mkt index. I use Optum.
I have been asking myself the same questions about using it for current expenses, but I continue to use cash.

[Gas_Doc]

Is there a reason why everyone who has responded thus far uses Optum? It doesn't necessarily seem like the best option out there...

[jfoxcpacfp]

Same as all the rest. Invested in a diversified equity mutual fund portfolio, don't touch, Optum. I purposely chose Optum and think it is a great HSA custodian. Good fund choices, low costs, can invest with a minimum $2k (I think) balance, easy to use reports.

[spiritrider]

Personally, I don't like the term "Stealth IRA". I understand the reason for it, because you can take non-qualified withdrawals after 65 and just pay ordinary income tax just like a traditional IRA.

However, it would be a great mistake to do so. because retirement medical, vision, dental and long term care (insurance or self-funded) costs are staggering.

The current average projection for such costs is roughly $250K per individual. The average retirement is twenty years and there is a high likelihood that at least one spouse will need $25+ years. For a person mid-career or less, that could easily rise to several hundred thou$and.

You can use an HSA for pretty much everything, but Medigap premiums. However, with a large HSA, you can easily self-insure Plan F hi-deductible, turning most of that into HSA eligible expenses.

"Retirement HSA" is a much better term for what you are investing for. It helps you focus on exactly what you are investing for and what the asset allocation should be.

Paying ordinary income taxes at 65 is a very bad idea, when you will most definitely still need the tax-free distributions for 20+ years.

 

[jhwkr542]

Gas_Doc wrote:

Is there a reason why everyone who has responded thus far uses Optum? It doesn’t necessarily seem like the best option out there…

Click to expand...

Employer's choice.  But tbh, their choice was Wells Fargo, which was bought up by Optum, so for the time being we're stuck with Wells Fargo's investment choices instead of Optum's good mix of investments  

[G]

jhwkr542 wrote:

Gas_Doc wrote:

Is there a reason why everyone who has responded thus far uses Optum? It doesn’t necessarily seem like the best option out there…

Click to expand…

Employer’s choice.  But tbh, their choice was Wells Fargo, which was bought up by Optum, so for the time being we’re stuck with Wells Fargo’s investment choices instead of Optum’s good mix of investments  

Click to expand...

Same.  Started at WFC but got put into Optum.  I just have mine in the market index fund -- I really don't need any choices.  It could be cheaper, but at 0.25%, it's not horrible.  I don't spend anything from my HSA.  I have a folder of un-reimbursed medical receipts that I might choose to use someday, or I'll just wait and use it for healthcare when I'm retired.  It sure is fun watching it grow!

[PhysicianOnFIRE]

See this similar thread for more discussion.

I switched to saving and scanning receipts, but I'm not convinced it's worth my trouble. I will likely cash out the receipts I've got when I leave my job, and start using the HSA for medical bills after that.

 

 

[PhysicianOnFIRE]

See this similar thread for more discussion.

I switched to saving and scanning receipts, but I'm not convinced it's worth my trouble. I will likely cash out the receipts I've got when I leave my job, and start using the HSA for medical bills after that.

 

 

[Gas_Doc]

For those wondering, after a bunch of research, I think I'm going to go with Saturna Capital. It's one of the few HSA that's really geared toward investment rather than as a debit account. There are no monthly maintenance fees and no monthly investing fees. Obviously their proprietary mutual funds (which are free to get into) are actively-managed and have high expense ratios, but with a brokerage account (free to open) you can buy a Vanguard ETF or Fidelity mutual fund for $14.95/transaction. So you could essentially have your HSA invested in VTI or FSTVX for $15/year, which is the cheapest I've seen.