HSA Rollover
Hello,
Do you know if you can rollover a IRA BDA account to a HSA account? I was not sure if IRA beneficiary accounts are eligible for a HSA rollover. Any help would be greatly appreciated.
Thank you.
The above post by spiritrider is also valid for inherited IRA QFDs. While the IRS has clarified that QFDs can be done from inherited IRA accounts and also that the amount of the transfer will apply to any RMD requirement for the inherited IRA, the result is still the same, ie the taxpayer must qualify for an HSA contribution subject to the testing period requirements, the QFD distribution from the IRA would not be taxable, and there would be no deduction for the HSA contribution. This is the same net result for a non QFD taxable distribution offset by an HSA deduction. IRS guidance copied below:
“Qualified HSA funding distribution only from certain types of IRAsA qualified HSA funding distribution may be made from a traditional IRA under § 408 or a Roth IRA under § 408A, but not from an ongoing SIMPLE IRA under § 408(p) or an ongoing SEP IRA under § 408(k). For this purpose, a SIMPLE IRA or SEP IRA is treated as ongoing if an employer contribution is made for the plan year ending with or within the IRA owner’s taxable year in which the qualified HSA funding distribution would be made.After the death of an IRA or Roth IRA account owner, a qualified HSA funding distribution may be made from an IRA or Roth IRA maintained for the benefit of an IRA or Roth IRA beneficiary. This distribution will be taken into account in determining whether the required minimum distribution requirements of §§ 408(a)(6), 408(b)(3), and 408A(c)(5) have been satisfied.”
Permalink Submitted by William Tuttle on Wed, 2022-01-26 22:06
Even if this was an owned IRA. It would not be wise to do this.
You must otherwise be eligible to make an HSA funding distribution.
It is seldom advantageous for anyone to do an HSA funding distribution unless they have no other sources to fund HSA contributions and the distribution would be otherwise subject to the 10% early withdrawal penalty.
You would be far better off making HSA contributions from taxable accounts and benefit from the deduction.
If you have no taxable accounts to fund the HSA contributions. You could just take a taxable distribution from the IRA BDA, make the HSA contribution and take the deduction. This would not be not subject ot any early withdrawal penalties, have no effect on your AGI/MAGIs and not subject to the 12-month testing period.