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Transferring IRA funds to your HSA
Transferring IRA funds to your HSA

Already have an IRA? Curious about other retirement accounts? Learn how to roll funds from an IRA to your health savings account.

Updated over a week ago

Want to avoid tax penalties for prematurely taking out funds for medical expenses from your retirement accounts? Rolling over IRA funds to an HSA ensures you avoid the tax penalties you would incur.

IRA transfers are a one-time opportunity

You can only roll funds from an IRA to an HSA once during your lifetime. The maximum amount you can roll over is the same as your annual HSA contribution limit for that year.

Why transfer?

In a traditional IRA, you'd likely pay income taxes on IRA withdrawals. Funds in a HSA, on the other hand, can be withdrawn tax-free for qualified medical expenses.

12 month testing period requirement

The IRA-to-HSA rollover includes a testing period that requires you to remain eligible for your HSA for 12 months following the transfer. At a minimum, you must stay in your High Deductible Health Plan (HDHP) until the testing period expires.

Taxable income & 10% penalty (if not eligible)

If you don't remain eligible during the testing period, you must include the money you rolled over as income when you file your taxes. In addition, the amount will be subject to a 10% penalty.

Annual contribution limit

An IRA transfer counts towards your annual contribution limit—keep this in mind.

Make a transfer

To initiate a transfer from your IRA funds to your HSA, you'll want to:

1. Complete the IRA Rollover form.

2. Submit the completed form to your IRA provider.

Other retirement accounts

You can't roll over a 401(k), 457, or other retirement accounts to a HSA, but you can roll them over to an IRA and then into your HSA. Check with your retirement account administrators to find out how to do those rollovers without a hiccup.

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