Bank of America Merrill Lynch

The dynamic duo: 401(k) + HSA

Recent trends indicate that employees are using a combination of an HSA and 401(k) to prepare for retirement. In fact, a recent study revealed that when participants contribute to both an HSA and a 401(k), they tend to contribute more to their 401(k) than those who contribute to a 401(k) alone.1

8.9% Average 401(k) contribution rate for participants who contribute to 401(k) and an additional 2.9% to their HSA.1
6.8% Average 401(k) contribution rate for participants who contribute only to a 401(k).1

These findings imply that employees who are inclined to save may also look to maximize the benefits their employers offer to try to save more. In fact, HSAs through an employer became the leading driver of new health savings account growth, accounting for 41% of new accounts opened in 2017.2 In general, the overall growth of HSAs continues to rise. By the end of 2017, 22 million accounts (an 11% increase compared to 2016) held $45.2 billion in assets.2

Employees’ concern with covering health care costs in retirement is intensifying, and could be another contributing factor to the growth of HSAs given their ability to help manage health care costs today while planning for health care costs in the future.

are more concerned with covering health care expenses in retirement than with lifestyle or other retirement expenses. This rate is up more than 5% from the past year.3

Although HSAs are gaining in popularity, employees are not using them to their full potential. The majority of employees (81.8%) are spending their HSA balance throughout the year to pay for out-of-pocket costs versus saving as much as possible for retirement or for large future medical expenses.3 We believe this is in part due to a lack of understanding about the features of an HSA.

Education continues to be key to helping employees understand how to make the most of their HSAs and 401(k) accounts, and how together they can be a powerful tool toward financial wellness.


Talk with your Bank of America Merrill Lynch representative today about the potential benefits of an HSA for your company and for your employees.

Offer access to education and guidance about HSAs.

Our health benefit solutions portal and Benefits OnLine® Education Center offer tools, videos, and other helpful resources.

The Personal Financial Journey can help employees put a plan of action in place.

Our financial wellness program includes HSA-focused seminars and other educational resources.

Learn more about the importance of effective HSA education.

1 The National Association of Plan Advisors, “How Does HSA Saving Affect 401(k),” 3/2/18.

2 2017 Year-End Devenir HSA Research Report.

3 Connect Your Care, Consumer Directed Health Accounts: Tax-Advantaged Account Usage, Outlook and Perceptions, 2018 Report.

Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

The Bank of America HSA is provided by Bank of America, N.A. (BANA), Member FDIC. Mutual fund investment services for the BANA HSA are provided by Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), a registered broker-dealer, Member SIPC and a wholly owned subsidiary of Bank of America Corp. ("BofA Corp."). Investments in mutual funds are held in an omnibus account at MLPF&S in the name of BANA, for the benefit of all HSA account owners. Investment advisory services for the HSA are provided to BANA by Devenir Investment Advisors, LLC, a registered investment adviser. Devenir is not an affiliate of BofA Corp.