Understanding Tax-Advantaged Savings Accounts

Various savings accounts offer tax advantages that can help you reach your financial goals faster. Understanding these accounts can help you make the most of your savings.

Health Savings Accounts (HSAs)

HSAs offer triple tax benefits: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. For 2025, contribution limits are $4,150 for individuals and $8,300 for families.

Flexible Spending Accounts (FSAs)

FSAs allow you to set aside pre-tax dollars for medical expenses or dependent care. Unlike HSAs, FSAs typically have a "use it or lose it" provision, though some plans allow a small carryover.

529 College Savings Plans

529 plans offer tax-free growth and tax-free withdrawals when used for qualified education expenses. Some states also offer tax deductions for contributions.

Coverdell Education Savings Accounts

Similar to 529 plans but with lower contribution limits ($2,000 per year) and more investment flexibility.

ABLE Accounts

Tax-advantaged savings accounts for individuals with disabilities, allowing savings without affecting eligibility for means-tested benefits.

Maximizing Benefits

Using these accounts strategically can save you thousands in taxes over time. Consider your current and future needs when deciding which accounts to fund.

Our financial planning team can help you determine which tax-advantaged accounts make sense for your situation and how to maximize their benefits.