Need your opinions, folks. What would you do?
With high interest rates now, does it pay at all to continue with my old HSA?
-I no longer qualify to add new $ to my HSA but have about $25k+ from previous years.
-I plan to use the money in 6 years
-HSAs earn hardly any interest. The interest IS tax free but the best available now is 2% (at 25k amount), which I'm getting. And rate is not guaranteed.
-With HSAs you can "cash out" by reimbursing yourself not only for CURRENT medical expenses, but for any PAST medical expenses too (as long as you have the receipts, they're legit, and you never reimbursed yourself for them before -- even if they're from 10+ years ago). I've had over 25k of medical expenses over the last 15 years and since I never reimbursed myself for them, I can legally do so now or in the future. So, I could completely "cash out" my HSA by reimbursring myself (paying myself back) for the $25k of past medical bills. But is now the time to do it?
-Other than the 2% tax free interest, I no longer get any tax break with my HSA since I no longer contribute new funds to it (nor do I want to, as I don't want a high-deductable medical plan at this point in my life).
-The only "tax break" I get is that the interest (2% currently) is not taxed.
So... I'm faced with a choice.
Even with rates dropping, I can still put that money in a 5yr CD at one local place (local only) that will pay 4.6% for that amount for a 5yr CD.
If I don't plan to use the money for 6 years, isn't it better to put it at a place that's paying 4.6% (but where that interest is taxed) over 2% (where the interest is not taxed, and the 2% is not guaranteed), or no? (As far as my tax rate: single, 80k-95k year income).
Even as rates have risen, HSA rates have NOT, so it's safe to assume the most I'll ever get is 2% (HSAs are also a pain to move elsewhere, so if it's not a huge change I won't move it).
If you were me, what would you do? Continue to earn 2% (currently) untaxed for 6 years, or put it into a 5yr CD @ 4.6% (taxed) and then somewhere else (taxed) for a year at the time?
Only "down" side I see is that if an emergency comes up a CD would lock the funds up (the 2% HSA is liquid), but the local place I'm thinking of has an EWP of 180 days which isn't bad if an emergency comes up.
Thoughts?
