An IRA is one way to fund a Health Savings Account.
You have a health savings account—HSA.
You opened it while you were not yet retired.
Now you are retired.
You are on Medicare.
You want to transfer the funds from your traditional IRA.
How do you do this?
According to a recent Kiplinger article titled “Transferring IRA Money to a Health Savings Account,” you will need to follow specific rules.
If you are not eligible to make new HSA contributions, you will not be eligible to transfer money from your IRA into an HSA.
If you are enrolled in Medicare, you cannot make contributions to an HSA.
Nevertheless, you can use the money for qualifying medical expenses if you are over age 65.
What if you are eligible to make HSA contributions?
You can make a one-time rollover from your IRA into your HSA.
You must have an HSA-eligible health insurance policy.
This policy must have a coverage deductible of no less than $1,300 if you are single or $2,600 if you have family coverage.
How much can you roll over?
The limit will be the same as your annual HSA contributions.
In 2017, this amount was $3,400 if single and $6,750 for families.
If you are age 55 or older, you could contribute up to $1,000 more.
The rollover can be tax-free.
But it must be a direct transfer from the IRA to the HSA.
This can only be done once in your lifetime.
So, measure twice and cut once.
If you contribute new money to the HAS, your tax benefit may be greater.
Work with an experienced financial advisor to determine the best approach for your goals and circumstances.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Kiplinger (August 18, 2017) “Transferring IRA Money to a Health Savings Account”