March 2018 Newsletter

The reason I named my book Top of the First is that we are early in the process of integrating retirement health care issues into our financial plans. This is particularly evident with the use of the Health Savings Account (HSA). In previous newsletters, I described the basics of HSAs and their potential to accumulate substantial retirement income. In short:

  • Deposits into an HSA account are pre-tax.
  • Earnings accumulate tax-free.
  • Withdrawals for qualified medical expenses are tax-free.

The decision to fully fund an HSA, abstain from making any withdrawals and therefore fully invest the HSA for retirement is taking hold with financial advisors. This is especially true with advisors’ personal HSA accounts. The ability to execute this strategy with clients, however, has been difficult. Most broker dealers have not provided an HSA product which would provide its clients a means to implement this strategy while compensating its advisors. Ideally, this HSA product would offer a full range of mutual fund investments in the same low cost share class utilized in defined contribution plans. This would allow an advisor to fully engage their client with an investment strategy and allocation comparable to their 401(k) or 403(b) plan, and actively monitor the strategy. Advisors handling entire defined contribution plans could mirror the offering in the HSA plan to the DC plan.

Plans do seem to be in the works as many broker dealer firms are sizing up this opportunity and evaluating HSA custodians. You might say we are in the “top of the first”. A few smaller firms and some in the RIA community have already implemented HSA products.

If your RIA firm or broker dealer would like to discuss providing an HSA product, please contact me at I have a solution.

Clients do need our help. Consider the findings in the 2018 CDH Trend Report:

  • 68% of pre-retirees site health care expenses as their primary concern.
  • 82% spend their HSA.
  • A top reason cited for not investing an HSA is lack of knowledge (not aware of investment options and not sure how to get started).
  • 63% of those investing their HSA into mutual funds do so for short term goals!

As we wait for the industry to move forward in providing HSA products we can at least offer general education to our clients on this important opportunity. Please let me know how I can help.


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The information in this presentation is provided as a general overview. It is derived from the Internal Revenue Code, and other government publications, all subject matter sources reasonably believed to be reliable.  Tax law and the laws governing Medicare/Medicaid are complex and subject to change.  Clients should consult with their attorney and/or qualified tax advisor when making decisions regarding these matters.