Use the funds for anything (once you turn 65)

Congratulations - this might be the most exciting birthday you've had since you were 21. That's because if you're 65 or older, your HSA rules have just been freed up. You can now spend your HSA funds on whatever you want, not just qualified medical expenses. (Forget the TV, you're going for that beach house now!)

You'll still have to pay back the income tax you skipped when you contributed to your HSA but now, you don't have to worry about the additional 20% tax penalty! Phew! As an added bonus to using your HSA money for whatever you'd like now, you'll also likely pay less income tax in retirement than your tax rate when you first contributed the funds, while also benefiting from your tax-free investment earnings on that money for many years.

Check out our complete HSA Eligibility List to see what falls under "qualified" medical expense.

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