HSA Question
Hello,
I have a couple a questions on HSA accounts that I would like to run by you. Rules allow clients to do a tax-free transfer from an IRA to a Health Savings Account (HSA) once during their lifetime.
- Can someone transfer money from a non-spousal inherited IRA to an HSA as their once per lifetime tax-free transfer?
- In general, if the delivering IRA is subject to RMDs, must the RMD be taken first before transferring to the HSA? Or similar to a QCD, can the distribution to the HSA satisfy the IRA RMD and be a tax-free transfer?
Thank you.
Permalink Submitted by Alan - IRA critic on Wed, 2025-10-01 18:56
Tax code Sec 408(d)(9) states that the funding distribution must be made from the IRA of “the employee”, so that would not include a beneficiary.
But there would be no benefit of doing so even if it were allowed. The RMD from the inherited IRA will be taxable, but if the beneficiary then takes those funds and (must be qualified) makes an HSA contribution, the HSA deduction will offset the tax on the RMD.