Rollover contributions and transfers
Rollover contributions and transfers to an HSA are permitted as long as the source of the funds is another HSA or MSA.
Funds that move directly between the old account trustee and the new account trustee are called trustee-to-trustee transfers. All other movement of funds from an HSA or MSA account is considered a rollover contribution. These rollovers and transfers do not count toward your maximum annual HSA contribution.
A rollover of HSA funds must be completed within 60 days from the date of receipt to avoid taxation. One rollover every 12 months is permitted. If you make a rollover contribution, you must certify to the trustee, in writing, that you are making a rollover contribution. Once made, the certification is final. An unlimited number of trustee-to-trustee transfers may be arranged by you without the restrictions mentioned for rollover contributions.
Since your HSA is owned only by you, you cannot roll over or transfer money to your spouse’s HSA account unless you die or a legal proceeding such as a divorce requires it.
Moving money from an IRA
You can make a one-time, tax-free transfer from an existing traditional IRA to your HSA. This rollover must be transferred from trustee to trustee to receive the tax benefit. The amount transferred counts toward and is limited to your maximum annual HSA contribution amount.
To complete an HSA transfer, visit CapitalBlueCross.com and download the form called the HSA One-Time IRA Rollover Request Form.
A smart IRA rollover strategy
If you have a traditional IRA (not a Roth, SEP or SIMPLE IRA) and one year you do not have the means to maximize your HSA contribution, consider rolling part of your IRA into your HSA (up to the contribution maximum amount). This one-time strategy works well for people age 64 or younger because it must be done prior to enrolling in Medicare. In addition, you may have a lower annual income (especially if you’re an early retiree).
Dollars withdrawn from traditional IRAs are taxed. But dollars withdrawn from an HSA are not taxed if used for eligible medical expenses.