There's a lot of debate about what the best retirement account is. Some say it's a 401(k) because it enables you to get an employer match on your contributions. Others say it's a Roth IRA because it allows for tax-free withdrawals in retirement.

But there's one account that's too often left out of the discussion. Health savings accounts (HSAs) aren't technically retirement accounts at all. But people are increasingly using them for retirement savings because of the rare perks they offer. Here's what you need to know to decide if an HSA is a good fit for you.

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How HSAs work

HSAs provide a tax-advantaged way for you to save for healthcare -- or, increasingly, for retirement costs. You put money into the account, and you can access it at any time. But you may only contribute to an HSA if you have a qualifying health insurance plan.

In 2023, you may contribute up to $3,850 to an HSA if you have an individual health plan with a deductible of $1,500 or more. Those with a family plan that has a deductible of $3,000 or more may contribute up to $7,750 to their HSA this year. And those 55 or older may add an extra $1,000 to these limits.

Benefits of saving in an HSA

HSA funds offer three major tax advantages. The first is that your contributions reduce your taxable income for the year, much like 401(k) or traditional IRA contributions. Say you earn $50,000 in 2023 and put $5,000 into an HSA. The government will only tax you on the remaining $45,000 when you file your 2023 taxes. This will reduce your tax bill and could even drop you into a lower tax bracket.

The second advantage is that any interest or earnings you accrue grow tax-free. And the third is that you get tax-free withdrawals if you use your HSA funds for medical expenses at any age. So you could potentially avoid taxes on your HSA funds entirely if you reserve them exclusively for medical costs.

But you don't have to do this. You can also make withdrawals for non-medical purposes. You'll have to pay taxes on these, though, plus a 20% penalty if you're under 65. The penalty is pretty steep, so it's generally not worth doing this. But after you turn 65, your HSA essentially becomes like a traditional IRA with the added bonus of tax-free medical withdrawals.

Another underrated HSA retirement perk is its lack of required minimum distributions (RMDs). These are annual withdrawals that the government requires people to take from most retirement accounts beginning in the year they turn 73. They're intended to force people to pay taxes on the savings they've been steadily accumulating for years. Since HSAs don't have RMDs, you can leave the money in your account as long as you'd like without having to make withdrawals that could raise your tax bill in retirement.

Last, some employees might qualify for an HSA match through their jobs. This works like a 401(k) match, where your employer will contribute money to your HSA when you do so, up to a certain percentage of your income. HSA matches are less common than 401(k) matches, but they're definitely worth claiming if you're eligible for one.

Getting the most out of your HSA

There's nothing wrong with tapping your HSA for medical expenses here and there. But if you plan to use it for retirement, try to avoid this. Budget for medical expenses in a separate savings account whenever possible.

Be sure you're investing your HSA funds as well. Check with your account provider to see if this is an option and consider switching if it's not. This will help your money grow more quickly than it could in a traditional bank account.

And don't forget to check the qualification requirements and contribution limits every year. It's possible you may be able to set aside more money in future years. But you must always make sure your health insurance leaves you eligible to do so. Otherwise, you could run into problems with the IRS.