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PaperclipPerfector  1mo ago (text post)   2090 thread views

Small-Scale Question Sunday for September 28, 2025

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The so-called “Shoebox Strategy” for an HSA seems to me to be strictly wrong for most people:

  1. If you execute the shoebox strategy, your money will remain in the HSA to grow “probably, hopefully, mostly tax-free” and you will be responsible for storing the receipts for more years than you would otherwise.
  2. If you instead cash out the amount right away and then coincidentally make a Roth contribution of an equal amount, then your money will be growing “surely tax-free”, which is generally better, and you get to immediately start the 7-year timer to be allowed to throw away your receipts.
  3. If you are already maxing out every tax-advantaged channel, and so cannot implement strategy (2), you should at least consider just withdrawing it and making a straight-up investment in some tax-efficient growth asset, since you're probably in a position to take advantage of the “surely tax-free” growth of the death basis step-up.

The only case I can see where the “shoebox strategy” wins over (2) is if you anticipate HSA exhaustion before age 60, and the only case I can see where it wins over (3) is if you anticipate HSA exhaustion before death.

Am I missing anything else here?

⸻

EDIT: just to be clear, by “strictly wrong” I mean “strictly beat by another strategy”, not “strictly beat by the default 'stupid' strategy of making the withdrawal immediately and keeping the proceeds in a 0% interest checking account or taxable savings account”.

I assume some of the people discussing this are already maxing out their Roth IRA options, or exceed the salary caps.

I assume some of the people discussing this…

That's the thing, though—I have never once (before today) seen Roth accounts mentioned in the context of this.

Of the first page of Google results for shoebox hsa strategy, every article, including a YouTube video and the Reddit thread, fails to mention either my Roth-sweep strategy or the growth-death strategies as alternatives to the shoebox strategy; only the Bogleheads Forum thread even makes mention of my Roth-sweep strategy. (HowToMoney gets half credit for at least suggesting the idea of maxing out your Roth contributions before you put anything in your HSA; but they still don't even touch on my claim about how you could do a lot better than the shoebox strategy with existing HSA-eligible receipts.)

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