Roll Retirement Money Into a Health Savings Account?
You can make a tax- and penalty-free transfer from an IRA to HSA, but it might not be a good move.
Can I roll over money from an IRA to a health savings account? Is it a good idea?
You can roll over money from an IRA to a health savings account without incurring taxes or penalties, but there are very specific rules and it may not be your best option. The size of the rollover is limited to the maximum HSA contribution for the year minus any HSA contributions you have already made for the year. For 2011, the maximum HSA contribution is $3,050 for self-only coverage or $6,150 for family coverage (plus an extra $1,000 if you’re 55 or older). To qualify for an HSA, you must have a health insurance plan with a deductible of at least $1,200 for self-only coverage or $2,400 for family coverage.
Rolling over funds from an IRA to an HSA can provide a tax-free source of money to cover big medical expenses or help you build up your HSA balance. But if you have enough cash, it’s better to make your full HSA contribution with new money because your contributions are tax-deductible and can be used tax-free for medical expenses. Then max out your IRA contributions for the year, too ($5,000 for 2011, or $6,000 if 50 or older by year-end), so you can make the most of both tax-advantaged accounts without having to raid your retirement fund. If you do want to make the rollover, contact both your IRA and HSA administrator and tell them that you want to make a direct transfer.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
For more information about health savings accounts, see What to Know About Health Savings Accounts and Health Savings Account Answers. For more information about IRA limits, see The Basics of Roth IRAs.
-
The Retirement Donor's Checklist: Key Deadlines by Gift TypeRetirees have some charitable contribution options that can help avoid spikes in income from RMDS and capital gains.
-
Cooler Inflation Supports a Relief Rally: Stock Market TodayInvestors, traders and speculators welcome much-better-than-hoped-for core CPI data on top of optimism-renewing AI earnings.
-
Are T-Mobile's Prepaid Perks a Home Run or a Strikeout?T-Mobile's prepaid lineup promises MLB.TV, T-Mobile Tuesdays and hotspot data. But do the perks make it worth switching?
-
Credit Report Error? They All Mattercredit & debt Don't dismiss a minor error. It could be the sign of something more serious.
-
Insurance for a Learning Driverinsurance Adding a teen driver to your plan will raise premiums, but there are things you can do to help reduce them.
-
Getting Out of an RMD Penalty
retirement When your brokerage firm miscalculates your required minimum distributions, you have recourse.
-
529 Plans Aren’t Just for Kids529 Plans You don’t have to be college-age to use the money tax-free, but there are stipulations.
-
When to Transfer Ownership of a Custodial Accountsavings Before your child turns 18, you should check with your broker about the account's age of majority and termination.
-
Borrowers Get More Time to Repay 401(k) Loans
retirement If you leave your job while you have an outstanding 401(k) loan, Uncle Sam now gives you extra time to repay it -- thanks to the new tax law.
-
When It Pays to Buy Travel Insurance
Travel Investing in travel insurance can help recover some costs when your vacation gets ruined by a natural disaster, medical emergency or other catastrophe.
-
It’s Not Too Late to Boost Retirement Savings for 2018
retirement Some retirement accounts will accept contributions for 2018 up until the April tax deadline.
