Retirement is on the minds of even young employees looking for some sort of safety net to support them in their old age. Two popular retirement benefits that companies can offer are health savings accounts (HSAs) and 401(k) accounts.
Both are ways to save money and offer considerable tax benefits for those planning their retirement. However, there are some major differences between how these accounts work, as well as how they can be used. Understanding both the strengths and limitations of each of these accounts is essential when trying to create a comprehensive employee benefits package.
HSAs holders can deposit funds into these accounts from their income and reduce their taxes for that given year tremendously, as well as invest the funds to gain returns tax-free. Withdrawing from these accounts is also not taxable, however, only when done to pay for qualified medical expenses.
People over the age of 65 can withdraw money from these accounts for any sort of expenses, making them a good candidate for retirement benefits packages.
401(k)s are the most popular type of retirement account for employees in the private sector/ contributions to this account are made from the employee’s taxable income, and the funds can be invested to earn even more tax-free.
The account holder can withdraw funds from this account if necessary, but if they do so before the age of 60 they will have to pay taxes for their funds and cover a penalty.
At first glance, HSAs and 401(k)s appear rather similar, but there are some significant differences to consider:
The answer to this question generally depends on many factors, such as whether your company offers an HDHP that allows setting up HSAs, employee needs to cover health costs, and even whether the funds need to remain more accessible to employees or not.
Additionally, both these accounts can be used together to offer a stronger retirement package for employees. If you need help deciding between the two, or whether it’s possible to include both in your package, the Taylor Benefits Insurance Agency can help.
The need for a strong employee benefits package cannot be understated, and especially when it comes to insurance, business owners can struggle to find the right plan that will both cover the expectations of employees, and fit into the company’s bottom line.
The Taylor Benefits Insurance Agency team is here to assist you in making the best choices when it comes to your employee benefits. Thanks to our expertise in this industry, we can provide you with top-tier choices when it comes to insurance, allowing you to effectively provide your staff with what they truly need.
To learn more about how we can help, we encourage you to call us directly at 800-903-6066 today.
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