TRANSCRIPT:
Did you know you can make a one-time penalty and tax-free rollover from your IRA into an HSA? This is called a qualified HSA funding distribution and comes from the Health Opportunity Patient Empowerment Act. Hi, I’m Alex Wolfe, Certified Financial Planner and Head of Financial Planning at Base Wealth Management. Today, we are going to go over a way to fund your HSA from your individual retirement account. An HSA is designed for people with a high deductible health plan as a way to cover extra out-of-pocket medical expenses. If this is you, an HSA is a way to save money for these expenses, triple tax advantage. Let me say that again, triple tax advantage. What do I mean by this? When you make an HSA contribution, you get to deduct that from your taxes, the money inside of it grows tax deferred if invested, and then when you take it out tax-free when used for qualifying medical expenses.
So, back to this way of funding it from your IRA. The IRS allows you to make a one-time contribution from your IRA into your HSA during your lifetime. But there are some important details to make note of to make sure that you are eligible to do this. One, you must be actively on a high deductible health plan. Two, they have a testing provision that states you must remain eligible for the HSA on the high-deductible plan for at least 12 more months after you do this rollover from your IRA into the HSA. Finally, you can only rollover or contribute up to the annual limit for the HSA that it allows in that year. For 2024, the limit is $4,150 for individuals and $8,300 for families. If you’re over 55, you can contribute an extra $1,000. If you fall into the family category, you cannot contribute the full $8,300 from your one IRA into your HSA. You each can do $4,150 into your own HSA from your own IRA. You may also roll over funds from your 401k or 457 into an HSA, but first, you must roll it into an IRA before doing so.
There you have it. This is a great way to fund your HSA from your IRA for medical expenses and allow it to grow tax advantage. If you found this video helpful and want to see more content, please subscribe to our channel and be sure to check out our website at Baswealthmanagement.com. I’m Alex Wolfe, Certified Financial Planner, and I’ll catch you on the next one.
