Is an MSA better than a 401(k) or IRA plan with respect to retirement?
A. It really is better and here’s why: You can deposit money into both an HSA and a 401(k) account on a tax deferred basis. You can earn interest or capital gains for both plans with out paying current taxes. However, the big difference is that you can withdraw money from the HSA without ever paying taxes as long as the withdrawals are for qualified expenses. Qualified expenses include Medicare premium (currently $96.40 monthly for Part B–$192.80 for a married couple), Long term care premium or medical expenses, out of pocket vision, hearing, dental, or medical expenses. You can withdraw the money for non-qualified expenses too, but those withdrawals subject to taxes just like the 401(k) withdrawals. To the extend that you can use the HSA account to pay qualified expenses in retirement, the HSA has a great advantage over a 401(k) or other retirement plan because you can avoid taxes altogether.
