How Much Can I Contribute and Deduct to a HSA, 401k, and IRA?

Health Savings Account (HSA), 401k, and Individual Retirement Account (IRA) are popular options for saving for retirement while enjoying tax benefits. Understanding how much you can contribute to these accounts and the deductibility aspects is crucial for maximizing your savings. Let's dive into the details of each:

Health Savings Account (HSA)

HSAs are tax-advantaged accounts available to individuals covered by high-deductible health plans. Here are the contribution limits and deductibility details for 2021:

• Individual Coverage: Up to $3,600 contribution with a $1,000 catch-up for those aged 55 and older. Contributions are tax-deductible.
• Family Coverage: Up to $7,200 contribution with a $1,000 catch-up. Contributions are tax-deductible.

401k

A 401k is an employer-sponsored retirement savings account. As of 2021, the contribution limit is $19,500, with an additional catch-up contribution of $6,500 for individuals aged 50 and older. Contributions to a traditional 401k are tax-deductible.

Individual Retirement Account (IRA)

IRAs are personal retirement savings accounts. For 2021, the contribution limit is $6,000, with an additional $1,000 catch-up for individuals aged 50 and older. Traditional IRA contributions may be tax-deductible based on income and participation in employer-sponsored retirement plans.

Understanding the contribution limits and deductibility rules for HSAs, 401k, and IRAs can help you make informed decisions about your retirement savings strategy. Consult with a financial advisor to explore the best options suited to your financial goals and circumstances.

Health Savings Accounts (HSAs) are an excellent way to save for medical expenses while also providing significant tax benefits. If you're covered under a high-deductible health plan, you can contribute up to $3,600 for individual coverage and $7,200 for family coverage in 2021.