Health Savings Account contributions

Submitted by John Hoover on Wed, 2018-12-19 20:56

I have uncertainty regarding optimum means for funding a Health Savings Account (HSA). I am 61. In 2018, I made a one-time Qualified HSA Funding Distribution (QHFD). I’ve utilized high deductible health plans (HDHP) with HSA contributions for a number of years. I am retired. In 2019, I will have a HDHP. I hope to find an optimum means to make HSA contributions until I get to Medicare. I would like to roll money from a traditional IRA into the HSA without taking taxed distributions. I welcome any HSA funding recommendations.



Submitted by William Tuttle on Wed, 2018-12-19 21:43

  1. The QHFD is a once in a lifetime option. Since you have already done one, you can not do another.
  2. The QHFD has subjcted you to the a testing period for all of 2019. If you fail to remain an HSA eligible individual until 12/31/2019, you will be subjct to a 10% penalty on the entire QHFD.
  3. It was totally unecessary, because after age 59.5 you can simply take an IRA distribution without penalty and make an HSA contribution. The taxable IRA distribtuon and HSA deduction will offset each other causing no change in your AGI/MAGIs.
  4. By using the QHFD or other tax-deferred withdrawals, you are wasting a potentially valuable tax deduction. Depending on the availability of other funds and your marginal tax rate, you might be better off using other funds.
  5. Just because you can do something, does not mean you should do something.

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