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What is a 401H Retirement Plan?

Man calling about a 401H plan.

Rolling over money from a traditional IRA or 401K to a 401H retirement plan is a great way to pay for health care. This type of plan offers several unique benefits. For example, you can take unlimited withdrawals for health care. And those withdrawals will not impact your social security benefits. Keep reading to learn more.

What is a 401H Retirement Plan?

A 401H retirement plan is more commonly called a “401(h) plan”. It is a type of employer-sponsored retirement plan that allows employers to offer additional benefits to their employees. Examples of benefits include tax-free contributions and the offer of tax-free withdrawals. With this account, you can take an unlimited amount of deductions. Plus these deductions do not count as Modified Adjusted Gross Income (MAGI) for determining Medicare premiums or surcharges. The 401H account also allows greater control over how you manage and invest the funds. It also provides advantages including potential tax savings and potential appreciation in value.

These plans are governed by section (h) of 26 U.S. Code § 401.

How Are Contributions Are Structured Within a 401H Plan?

You have the option of increasing or decreasing your contributions based on your needs. This makes it easier to adjust your contributions over time.

Determine if You Qualify for Tax Advantages with a 401H Plan.

With a 401(h) account, you can take an unlimited amount of deductions, including the offer of tax-free contributions and proceeds. This means that investing in a 401(h) retirement plan can help you save more. At the same time, you also enjoy the potential tax advantages it offers. To determine your eligibility for taking these deductions, give us a call at 602-443-4888.

How To Roll Over Your Qualified Retirement Plan to a 401H Plan.

Rolling over your accounts is a great way to get the most out of your 401(h) Retirement Plan and take advantage of the tax advantages it offers. To begin, contact the institution holding your qualified retirement plan, such as an IRA or employer-sponsored account. The institution will provide you with a rollover form, which you’ll then fill out and submit along with copies of the account beneficiary designations for each qualified retirement plan. Once you submit your paperwork, your prior employer-sponsored plan or IRA will transfer the funds to the new 401H Retirement Plan. Depending on the provider, there may be fees associated with this transfer process.

We can provide a customized 401H Plan for you.

If you don’t find a 401H provider that makes sense for you, give us a call. The cost of setting up your own plan is way less than what you could lose in social security benefits and taxes.

SSA Does Not Consider Withdrawals From Your 401H Plan As Income For IRMAA.

Withdrawals you make from your 401H Retirement Plan are not considered income for IRMAA (or Medicare) calculations. Any withdrawals are excluded from consideration when determining your IRMAA annually. This means that if you draw on your 401H plan, it won’t affect the amount of your Social Security benefits. In other words, the Social Security Administration will not count the withdrawal as income when it calculates you Medicare premium.

We Can Create a 401H Plan for You.

We are one of the few law firms in the U.S. that creates 401H plans. Give us a call at 602-443-4888 so you can get one for yourself.



Founding attorney Paul Deloughery has been an attorney since 1998, became a Certified Family Wealth Advisor. He is also the founder of Sudden Wealth Protection Law.