How to Set Up IRA Transfer to HSA

By: Mark Kennan

An IRA-to-HSA transfer can help you get money out for medical expenses.

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The Internal Revenue Service allows taxpayers once in their lives to transfer funds from either a traditional individual retirement account or a Roth IRA to a health savings account. The amount of the transfer is limited to, and counts against, your annual contribution limit for your health savings account. If you have significant medical expenses but don't have the cash to put into your HSA so you can take advantage of the tax benefits, transferring money from an IRA to an HSA allows you to withdraw tax-free and penalty-free distributions to pay those medical costs.

Step 1

Complete a transfer request form from the bank that holds your HSA. On the form, you must include the amount you want transferred, the account information for the IRA from which you want the money taken and your personal identifying information, like your name, address and Social Security number.

Step 2

Give the HSA-to-IRA transfer form to the bank that holds your HSA. Your bank will then make the transfer automatically rather than having you receive the money first and then deposit it into the HSA.

Step 3

Report the amount of the transfer on Part I, Line 10, of Form 8889 when you file your taxes. It will not add or subtract from your tax liability, but you must still report it for IRS record keeping.

Items you will need

  • IRS Form 8889

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About the Author

Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."

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