Take Advantage of the Once-in-a-Lifetime IRA-to-HSA Rollover

Written by Coach Janelle CPA on May 15, 2023

Health Savings Accounts (HSAs) are designed for use alongside high-deductible health plans, assisting you in covering your medical expenses. They can also function as an incredible retirement account due to their triple tax benefit:

You can deduct contributions from your taxes.

Your account balance grows without being taxed.

Withdrawals for medical expenses are tax-free.

And after age 65, you can use the monies for non-medical purposes, the same as you can with a traditional IRA, and pay taxes at ordinary income rates but without penalties.

We recommend that you fully fund your HSA each year until you enroll in Medicare and that you ideally minimize distributions. By doing so, even if you start at age 50, you could accumulate $200,000 or more by the time you reach age 65.

To assist in funding your HSA, there is a special, lesser-known rule: you can roll over funds from your IRA to your HSA once in your lifetime through a qualified HSA funding distribution.

The rollover amount is limited to your HSA contribution limit for the year. In 2023, this amounts to $3,850 for individual coverage and $7,750 for family coverage. If you are over age 55, you can add a $1,000 catch-up contribution.

The rollover amount doesn’t count as income, isn’t deductible, and reduces the amount you can contribute to your HSA for the year. The big benefit is that you turn this otherwise taxable money into tax-free money when you use it for medical expenses.

Tax season can be a stressful time for many individuals and businesses, but it doesn't have to be. With the help of Coach Janelle CPA's personalized tax strategy planning, you can maximize your savings and minimize your stress.

Janelle's extensive experience in accounting and financial planning allows her to develop customized tax strategies that are tailored to your specific needs and goals. By analyzing your financial situation and identifying potential deductions and credits, she can help you save money and achieve your financial objectives.

But Janelle's tax strategy planning isn't just about minimizing your tax liability. She also focuses on helping you make informed decisions about your finances, so you can achieve long-term financial stability and success. With her guidance, you can create a comprehensive plan that takes into account your current and future financial goals, ensuring that you're on track to achieve them.

Don't let tax season stress you out. Let Coach Janelle CPA help you take control of your finances with her personalized tax strategy planning. Contact her today to schedule a consultation and get started on the path to financial success.

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