HSA Question

Submitted by John Boyle on Sat, 2025-02-08 14:09

My client had an HSA through work. The HSA provider was changed and the costs for the new plan were much higher, so my client requested a check for the balance. Would the client have an amount of time to open and fund a new HSA (like a 60 day rollover)? Also, the check was cut and sent in early January. Can my client use the amount for medical costs anytime in 2025, or is there some deadline?

Flag as spam

Permalink Submitted by Alan - IRA critic on Sat, 2025-02-08 18:32

Yes, a 60 day rollover can be done within 60 days of receipt, but this can only be done once in a 12 month period. The distribution and rollover is reported on Form 8889.

Some of the distribution could be rolled over, and the rest either used to pay qualified expenses (non taxable) or kept as a taxable distribution plus penalty. There is no deadline to pay the expenses, and an HSA distribution can be taken years after the expenses were paid as reimbursements for those expenses, if all can be documented. Expenses incurred before the HSA was established are not eligible expenses.