Can an HSA be move to an IRA: My client is a 60 year old and has $38000 in a HSA, Just change jobs and doesn’t need an HSA

Submitted by Brenda Burton on Thu, 2018-08-23 21:24



Submitted by Alan - IRA critic on Thu, 2018-08-23 22:56

HSA funds cannot be rolled into an IRA. However, an HSA has the largest tax advantage of any type of retirement account because you get a deduction for contributions and distributions are tax free if used for qualified medical costs. Many people do not even pay many of their medical expenses from the HSA because the HSA money can continue to grow tax free, but surely the client will have medical expenses for years that can be paid from the HSA if he wants to.

Submitted by William Tuttle on Fri, 2018-08-24 18:01

  • Whether the individual has significant qualified medical expenses now or not.
  • They will have significant qualified medical expenses in retirement.
  • After age 65; Medicare Part B and D premiums, most other insurance premiums (dental, vision, LTC, etc…), all OOP expenses (medical dental, vision, hearing, etc…) are all qualified medical expenses.
  • The one exception is Medigap (Medicare Supplement) plan premiums, which are not qualified medical expenses. With a large HSA you can self-insure a high-deductible ($2240) plan.
  • An average 65 year-old retired couple in 2018 can expect to pay $275K (2018 dollars) in medical expenses in their lifetimes.
  • The more you have in an HSA at retirement the better. Using tax-free HSA distributions for medical expenses is a lot better than using taxable IRA distributions.
  • Worst case; you can take distributions from an HSA >= age 65 penalty-free, but taxable the same as an IRA. However, because of the tax-free potential of an HSA. You should only do that in most cases if there are no other tax-deferred assets.

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