rollover an IRA to an HSA,
Can it be done, & what are the tax consequences, what amount can be rolled over? Can it be rolled over each year?
Can it be done, & what are the tax consequences, what amount can be rolled over? Can it be rolled over each year?
Permalink Submitted by Alan - IRA critic on Thu, 2020-02-06 16:19
A qualified HSA funding distribution (QHFD) is a one time (in your lifetime) direct trustee transfer from an IRA to an HSA, but is reported as a distribution and rollover on your tax return. The amount cannnot exceed what you otherwise would have been eligible to contribute to your HSA for the year of the transfer. The HSA balance grows but your IRA balance drops by this amount. There is no deduction for this transfer. If you fail to meet the HSA contribution testing rules, the amount of the QHFD that would not have been eligible as an HSA contribution will be taxable and subject to penalty. So do not do this if there is any doubt about maintaining your high deductible health insurance coverage. This option is not as beneficial as making your regular HSA contribution with new money and getting a deduction, so you must determine if this transfer is beneficial or not.