401(k) and HSA Discovery Experience

------ POTENTIAL BALANCE
401(k)
HSA

Why is it important to discuss?

There are multiple ways to contribute to your retirement. The strategy you use can impact your long-term goals.

Understanding the impact retirement accounts available to you have on your overall retirement potential may help you make informed decisions.

Healthcare costs are a large component of your expenses in retirement. An HSA may be a more effective option to meet the healthcare expenses in retirement.

Next Steps

Explore if an HSA is available for you via your workplace benefit program and understand the benefits of an HSA, including the triple tax benefit.

Explore using your 401(k) and HSA to maximize your retirement potential.

Obtain your personal contribution rates in your 401(k) and if applicable your Health Savings Account to use in the experience.

Obtain your employer's match rates and limits for both your 401(k) and Health Savings Account to use in the experience.

How to Use:

This experience will only model an individual scenario. Begin by entering basic personal information, including your current age, your planned retirement age and your current salary. Once complete toggle to include your 401(k) information including your current 401(k) balance, your pre-tax contribution rate, your employer match, and employer maximum match limit. After providing your 401(k) information, you toggle to include or exclude a Health Savings Account. Health Savings Accounts are only available to participants in a high deductible health plan. To exclude a Health Savings Account from your assumptions, uncheck the box below "Include HSA in results" and toggle to the finish.

If a Health Savings Account is available to you and you would like to use it to model your potential balance, enter your current balance, your annual contribution and your employer's annual contribution to the account in dollars. Once your Health Savings Account information is complete, select FINISH to see your results.

Note: Any input where the default is not changed will utilize the listed input as the assumption

Important disclosures and assumptions
Health Savings Account (HSA)
  • 2020 Annual Contribution limit (Employee + Employer)
  • $3,550 individual
    $7,100 family
    +$1,000 over age 55
  • Assumes individual limit only
  • No distributions or fees deducted from account
  • Assumes 6.4% Rate of Return
  • Assumes entire HSA balance is invested. Plans may have varying designated cash balance requirements that must be met prior to employee investing.
401(k)
  • 2020 Annual Contribution limit
  • $19,500 individual
    +$6,500 over age 50
  • No distributions or fees deducted from account
  • Assumes 6.4% Rate of Return
  • Assumes employer match is capped at 50% of each employee dollar contributed with an employer dollar cap match of $10,000
  • Assumes only pre-tax contributions

The potential balance value illustrated in the chart above considers what your account balance(s) may be at retirement based on the current balance of your 401(k) and/or HSA account that you provided. Potential balance growth over time illustrates the potential value of your account(s) if you:

Contribute the full individual contribution limits listed above in these assumptions for 401(k) and HSA.

Take advantage of the full employer match based on the values you provided; and

Make catch-up contributions to the 401(k) account starting at age 50 and the HSA account starting at age 55.

The 401(k) and HSA balances illustrated in the chart above considers was your account balance(s) may be at retirement based on assumptions that you provided. They do not automatically include catch-up contributions.

This hypothetical illustration assumes a 6.4% annual effective rate of return and pre-tax contributions made at the end of each year. Hypothetical results are for illustrative purposes only and are not meant to represent the past or future performance of any specific investment vehicle, nor does it account for the effects of taxes, any investment expenses or withdrawals. Investment return and principal value will fluctuate and when redeemed the investments may be worth more or less than their original cost. It is not intended to serve as investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. The assumed annual effective rate of return will be reviewed on an annual basis.

Taxes are due upon withdrawal. If you take a withdrawal from your 401(k) prior to age 59½, you may also be subject to a 10% additional federal tax. You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur afer you establish the HSA. If you receive distributions from your HSA for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% federal tax. However, there is no additional tax on distributions made from your HSA after the date you are disabled, reach age 65, or die.

About Triple Tax Advantages: You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax. Any interest or earnings on the assets in the account are tax free. You may be able to claim a tax deduction for contributions you, or someone other than your employer, make to your HSA. Bank of America recommends you contact qualified tax or legal counsel before establishing a HSA.

Bank of America, Merrill, their affiliates, and advisors do not provide legal, tax or accounting advice. Clients should consult their legal and/or tax advisors before making any financial decisions. This material should be regarded as general information on health care considerations and is not intended to provide specific health care advice.