Health savings accounts (HSAs) are poised for growth, making 2007 the perfect time to complement your retirement service offering with this new form of retirement savings.¹

What Is an HSA?
An HSA is a custodial account established exclusively to receive tax-favored contributions on behalf of eligible individuals enrolled in high-deductible health plans. HSAs are designed to make health care more affordable. Contributions to these accounts are tax-deductible, accumulate on a tax-exempt basis, and are not subject to tax if the money is used to pay for eligible medical expenses. They are powerful savings tools that help offset out-of-pocket health care costs during clients’ retirement years. Contributions made in one year and not used to pay for eligible medical expenses in the year they are made can be applied to later medical expenses.

New Rules, New Growth
Today there are just two million HSAs, but experts project this number will grow to nearly 35 million by 2015.² New laws are one reason for the rising popularity of these custodial accounts—particularly among the wealthy. The laws allow workers to shelter more money from income taxes. The most significant change involves higher caps on tax-free savings. In 2007, HSA contributions can be as much as $2,850 for single coverage and $5,650 for family coverage. For individuals age 55 and older, annual catchup contributions may be made of up to $800.

Industry Best
As a long-time, trusted service provider of tax-deferred accounts, Pershing is expanding our retirement service offering to include HSAs by working closely with two of the best HSA sponsors in the industry—HSA Bank and Millennium Trust Company, LLC.

Marketing Ideas
Here are several ways to promote HSAs to gather assets and grow your business:

• Invite clients to roll over assets from individual retirement accounts into HSAs to enjoy the tax advantages of this retirement vehicle.
• Introduce HSAs to small businesses, which are excellent prospects due to the high deductibles that are common in their health plans.
• Conduct a direct-mail campaign to raise awareness with your high-net-worth clients about the higher cap on tax-free savings in HSAs.

To find out how you can expand your retirement services offerings with HSAs, please contact your home office.

¹ The Kiplinger Letter, “Look for a Boom in Health Savings Accounts Next Year,” December 15, 2006.
² Lee Conrad, “Making Sense of HSAs for Community Banks,” US Banker, June 1, 2006.