These 3 Long-Term Investment Accounts Offer a World of Flexibility

If you invest your money in a taxable brokerage account, you'll get complete flexibility with it. You can contribute as much to your account as you want each year, and you can cash out investments whenever you choose without risking a penalty.

Tax-advantaged savings plans don't tend to offer the same degree of flexibility. With a traditional individual retirement account (IRA), for example, you must leave your savings untouched until age 59 1/2. Otherwise, you risk a 10% early withdrawal penalty (though there are exceptions). The same holds true for a traditional 401(k) plan.

Of course, both of these accounts give you a tax break on the funds you contribute. So there's that benefit. But you still have to follow the IRS's rules.

But there are certain long-term investment accounts that are loaded with tax benefits and offer a fair amount of flexibility. Here are three you may want to consider.

1. A Roth IRA

With a Roth IRA, you'll be subject to the same annual contribution limits as a traditional IRA: $7,000 this year if you're under age 50, or $8,000 if you're 50 or older. However, you can withdraw your principal contributions at any time without penalty because you're not getting a tax break on them.

Let's say you contribute $10,000 to a Roth IRA that eventually becomes worth $25,000. If you need $10,000 to renovate your home and don't want to take out a loan, you can tap your Roth IRA for that money. As long as you don't touch the $15,000 gains portion, you don't have to worry about a penalty.

Of course, tapping a retirement account like a Roth IRA ahead of retirement could have negative consequences, so it's a move to consider with caution. But the option does exist.

You should also know that Roth IRAs offer the benefits of tax-free investment gains and tax-free withdrawals. And Roth IRAs don't force savers to take required minimum distributions. This means you can leave your savings to grow tax-free indefinitely.

Now, one hiccup you might face with a Roth IRA is exceeding the income limits to fund one of these accounts directly. But in that case, you can contribute to a traditional IRA and convert it to a Roth.

2. A Roth 401(k)

With a Roth 401(k), you'll get all of the benefits mentioned above with a Roth IRA. Only there's one key difference: You can put more money into a Roth 401(k) annually. This year, the limit is $23,000 if you're under age 50, or $30,500 if you're 50 or older.

Another difference between Roth IRAs and Roth 401(k)s? With the latter, there are no income limits to worry about.

3. An HSA

If you've ever found yourself trying to quickly spend down a flexible spending account to avoid losing money, then you may be hesitant to save in an HSA, or health savings account. But HSAs work very differently.

Unlike FSAs, they don't require you to deplete your plan balance year after year. In fact, they incentivize savers not to do that, because unused HSA funds can be invested for added growth.

What's more, investments in an HSA get to grow tax-free, and withdrawals are tax-free when used for qualifying medical expenses. So if you contribute $10,000 to an HSA and it grows into $20,000, that $10,000 gain is yours tax-free. And you can use your $20,000 balance at any age or stage of life.

Also, once you turn 65, you won't face a penalty for taking an HSA withdrawal for a non-medical reason. At that point, remaining funds in your HSA can be considered general, all-purpose savings.

You will need to meet certain criteria to qualify for an HSA, such as having a minimum deductible of $1,600 for self-only coverage or $3,200 for family coverage. Your out-of-pocket maximum also is limited to $8,050 for self-only coverage or $16,100 for family coverage.

From there, you can contribute up to $4,150 for self-only coverage this year or up to $8,300 for family coverage. And if you're 55 or older, these limits rise by $1,000.

You may find it easiest to house your investments in a regular brokerage account. But consider a Roth IRA, Roth 401(k), and HSA as alternate homes for your money.