For Carter's employees, maximizing contributions to your HSA in 2025 may be a smart way to control costs around healthcare and also grow your long-term savings for retirement, said.
With the increase in HSA contribution limits coming soon, Carter's employees approaching retirement should take advantage of this opportunity to grow their healthcare savings now so they can take a tax-efficient approach to future medical costs, said Sullivan.
In this article, we will discuss:
1. Limits on 2025 IRS health savings account (HSA) contributions.
2. How HSAs give you a triple tax advantage and help you control costs for healthcare.
3. HSAs & retirement planning & Medicare premiums.
The IRS has announced inflation-adjusted increases to the health savings account (HSA) contribution limits for 2025. The contribution cap for those with self-only health coverage will increase from USD 4,150 in 2024 to USD 4,300 in 2025, and for families, the maximum will increase from USD 8,300 to USD 8,550.
HSAs provide a triple tax benefit - contributions are deductible, account assets grow tax-free, and withdrawals for approved medical expenses are tax-free. Such features help HSAs manage healthcare costs.
Your high-deductible health plan must offer an HSA. For the year 2025, the IRS says the plans must carry a USD 1,650 individual deductible and USD 3,300 family deductible.Even with all these benefits, a 2023 survey by the Plan Sponsor Council of America found only 19% of HSA account holders invest—most keep their savings in cash—potentially missing big growth opportunities.
The IRS is also updating the catch-up contribution limit for Carter's employees over age 55 this year—keeping the USD 1,000 catch-up contribution for now.Understand HSAs and how they could benefit your financial strategy—especially with the rise of healthcare costs and retirement planning. Prompt financial decisions such as switching to a Roth IRA or drafting a will are life planning steps as well.
And for Carter's employees approaching retirement age: HSA money can help pay for Medicare premiums when you turn 65. That includes Medicare Advantage plans, as well as Parts B and D premiums, although Medigap premiums are not eligible for HSA expenditure. While not all medical expenses are covered by Medicare, funding these costs through HSAs could optimize your healthcare spending in retirement. A 2022 study by Fidelity Investments estimated medical costs for a retired couple would be around USD 315,000 after taxes.
Consider your health savings account (HSA) an essential tool in your financial toolkit. Like getting a new phone, increasing HSA contribution limits for 2025 gives you more options to manage and invest in your healthcare. You can think of contributing to your HSA as downloading an app that gives you triple tax benefits—deductions on contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. This keeps your health coverage as current and efficient as new technology—making your HSA a critical component of your Carter's retirement planning strategy.
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- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
- 7 Things to Consider Before Leaving Your Company
- How Are Workers Impacted by Inflation & Rising Interest Rates?
- Lump-Sum vs Annuity and Rising Interest Rates
- Internal Revenue Code Section 409A (Governing Nonqualified Deferred Compensation Plans)
- Corporate Employees: Do NOT Believe These 6 Retirement Myths!
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Sources:
1. Fidelity Investments. 'HSA Contribution Limits 2024 and 2025.' Fidelity.com , 23 Jan. 2025, https://www.fidelity.com/learning-center/smart-money/hsa-contribution-limits . Accessed 5 Mar. 2025.
2. Plan Sponsor Council of America (PSCA). 'Helping Employees Enroll in HSAs.' PSCA.org , 9 Nov. 2023, https://www.psca.org/news/psca-news/2023/11/PR_2023_HSAreprot . Accessed 5 Mar. 2025.
3. Internal Revenue Service (IRS). 'Part III Administrative, Procedural, and Miscellaneous.' IRS.gov , May 2024, https://www.irs.gov/pub/irs-drop/rp-24-25.pdf . Accessed 5 Mar. 2025.
4. Woodruff Sawyer. 'IRS Releases 2025 HSA Contribution Limits and HDHP Deductible and Out-of-Pocket Limits.' Woodruffsawyer.com , 13 May 2024, https://woodruffsawyer.com/insights/2025-hsa-limits-released . Accessed 5 Mar. 2025.
5. Plan Sponsor Council of America (PSCA). 'HSAs: A Growing Retirement Savings Strategy.' 401k Specialist , Nov. 2023, https://401kspecialistmag.com/higher-numbers-of-hsas-positioned-as-retirement-savings-strategy . Accessed 5 Mar. 2025.
What type of retirement savings plan does Carter's offer to its employees?
Carter's offers a 401(k) retirement savings plan to its employees.
Is participation in the 401(k) plan at Carter's mandatory?
Participation in Carter's 401(k) plan is voluntary for employees.
What is the eligibility requirement for Carter's 401(k) plan?
Employees at Carter's are eligible to participate in the 401(k) plan after completing a specified period of employment, typically outlined in the employee handbook.
Does Carter's match employee contributions to the 401(k) plan?
Yes, Carter's offers a matching contribution to employee contributions made to the 401(k) plan, subject to certain limits.
How can employees at Carter's enroll in the 401(k) plan?
Employees can enroll in the Carter's 401(k) plan by completing the enrollment process through the company's benefits portal.
What types of investment options are available in Carter's 401(k) plan?
Carter's 401(k) plan offers a variety of investment options, including mutual funds, stocks, and bonds, allowing employees to choose based on their risk tolerance.
Can employees change their contribution percentage to the 401(k) plan at Carter's?
Yes, employees at Carter's can change their contribution percentage to the 401(k) plan at any time, subject to plan rules.
What is the vesting schedule for employer contributions in Carter's 401(k) plan?
The vesting schedule for employer contributions in Carter's 401(k) plan is detailed in the plan documents and typically requires employees to work for a certain number of years before fully owning the employer match.
When can employees at Carter's withdraw funds from their 401(k) accounts?
Employees can withdraw funds from their Carter's 401(k) accounts upon reaching retirement age, or under certain circumstances such as financial hardship, as defined by the plan.
Does Carter's provide educational resources for employees regarding their 401(k) plan?
Yes, Carter's provides educational resources and workshops to help employees understand their 401(k) plan options and investment strategies.
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