Puzzlehead--92 OP t1_jefdlw7 wrote on March 31, 2023 at 4:38 PM

Reply to comment by RussRevengeTour23-24 in HSA investment question by Puzzlehead--92

Thanks! I was thinking of a CD ladder for the short term and recalibrate if (and when) the fed pivots. Long term though ETF's seem the better option.

Are there any tax implications for interest earned with CDs in HSAs given that the principle+interest (without auto-roll) would be back in the account?

RussRevengeTour23-24 t1_jeffbko wrote on March 31, 2023 at 4:50 PM

Not positive on that, but I don’t think there are any taxes. You always hear of the “triple tax advantages” of the HSA. It’s the best thing going.

Edit: confirmed that there shouldn’t be any taxes on growth.

https://www.morganstanley.com/articles/health-savings-account-retirement-tax-advantages#:~:text=HSAs%20are%20savings%20vehicles%20that,enjoy%20tax%2Dfree%20growth%20potential.

whisky_in_your_water t1_jeg1vxf wrote on March 31, 2023 at 7:18 PM

Yup, no taxes whatsoever unless you withdraw w/o a valid medical expense, and there's a penalty if you withdraw w/o a valid medical expense before 65, at which point it's essentially an IRA.

PalaHeels t1_jeg3gs8 wrote on March 31, 2023 at 7:28 PM

I would warn you against trying to time the market. If you view that money as long term then the best plan is an index fund/ETF regardless of what the fed is doing right now. You have no idea when the market will shift. If you need the money safe in CDs, that should be the plan going forward as well.