VALLEY FORGE, Pa., Nov. 15, 2018 /PRNewswire/ -- Vanguard today announced a partnership with HealthEquity, the nation's largest independent health savings account (HSA) custodian, to provide defined contribution (DC) plan sponsors and their participants a new service integrating health and wealth planning for retirement. Vanguard will offer sponsors the ability to provide a leading HSA solution to their employees that features low-cost Vanguard funds or the same investment options as their 401(k) plan line-up.
HSAs can be an effective, highly tax-efficient means to save for health care expenses in retirement, as outlined by recent Vanguard research. For Vanguard participants who elect to save in a HealthEquity HSA, Vanguard's Retirement Readiness Tool technology will integrate their HSA information with their 401(k) balance and other assets to give them a comprehensive view of their current and future retirement savings. Participants will also benefit from highly personalized communications that are rooted in behavioral finance and proven to successfully encourage their next best action.
"We're continuously expanding our financial planning tools and robust advice capabilities to improve financial wellness for millions of retirement savers. By meeting the financial needs of our participants today, we can help improve their retirement outcomes tomorrow," said Martha King, Vanguard Managing Director and Head of the Vanguard Institutional Investor Group. "The HealthEquity partnership is a testament to our continued commitment to providing plan sponsors and their participants with an industry-leading client experience, and the tools and resources to help them achieve financial success and security."
Participants investing in an HSA enjoy several benefits, including a triple tax advantage: 1) contributions are made pre-tax or are tax-deductible; 2) earnings and interest accumulate tax-free; and 3) withdrawals for qualified medical expenses are also non-taxed. After age 65, account owners can make withdrawals for any expense without a penalty; however, withdrawals used for anything other than medical expenses are taxed as income.
"Consumers who learn to use HSAs and DC plans together are on the fast track to retirement readiness. Our partnership with Vanguard offers plan sponsors a powerful solution to connect health and wealth," said Jon Kessler, President and CEO at HealthEquity.
With $1.1 trillion in DC assets under management, Vanguard serves as recordkeeper and strategic partner to more than 1,900 qualified plan sponsors—helping them to build and manage effective DC plans for more than 4.8 million participants. Vanguard believes that retirement planning is highly personal and dependent on a variety of factors, as outlined in Vanguard's roadmap to financial security: A framework for decision-making in retirement. As such, the firm has long been recognized as an industry leader in DC plan design and services, providing sponsors with the investment options, technology, tools, and research to help prepare participants for their unique path to retirement. As a supplement to its new HSA solution, Vanguard plans to introduce a new proprietary health care cost calculator that will help participants to better plan and save for health care expenses in retirement.
Vanguard is one of the world's largest investment management companies. As of September 30, 2018, Vanguard managed $5.3 trillion in global assets. The firm, headquartered in Valley Forge, Pennsylvania, offers more than 400 funds to its more than 20 million investors worldwide. For more information, visit vanguard.com.
HealthEquity connects health and wealth, delivering health savings account (HSA), 401(k) and other consumer driven health and retirement solutions in partnership with over 40,000 employers and 124 health plans and administrators nationwide. HealthEquity members have access to its end-to-end platform and remarkable "purple" service to become consumers of healthcare while building health and retirement savings for tomorrow. HealthEquity is the custodian of $7.0 billion in assets for 3.6 million HSA members nationwide. For more information, visit www.HealthEquity.com.
All asset figures are as of September 30, 2018.
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