Health savings accounts

Even if these retirement accounts are traditionally seen as retirement accounts, health savings accounts (HSAs) might be an effective savings vehicle (if your employer gives you one, and you are covered by an eligible high-deductible health plan).

Contributions will definitely reduce your taxable income up to the annual limits, investments grow tax-free, and also you won’t pay any tax on withdrawals for qualified medical expenses. Once you reach 65 years old, withdrawals for nonmedical reasons will be taxed as ordinary income. HSAs are also exempt from RMDs.