Are HSA and IRA Contribution Limits Separate?

Health Savings Accounts (HSAs) and Individual Retirement Accounts (IRAs) are both popular options for saving and investing money for the future. Many people wonder if the contribution limits for these accounts are separate or if they are combined. Let's dive into this question to help you understand better.

HSAs and IRAs are separate accounts with separate contribution limits. Here's a breakdown of how each account works:

• HSAs are specifically for medical expenses and require you to be covered by a high-deductible health plan.
• IRAs are designed for retirement savings and can be opened by anyone with earned income.

Now, let's address the contribution limits:

• For HSAs in 2021, the contribution limit for an individual is $3,600 and $7,200 for a family.
• For IRAs in 2021, the contribution limit is $6,000 for individuals under 50 and $7,000 for those 50 and older.

It's essential to note that these limits are separate, meaning you can contribute to both your HSA and IRA up to their respective limits. This allows you to save and invest for both your current medical expenses and future retirement needs.

Health Savings Accounts (HSAs) and Individual Retirement Accounts (IRAs) serve distinct purposes with their own contribution limits. Understanding these separate limits can help you optimize your financial strategy for both healthcare and retirement savings.