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

Health Savings Accounts (HSAs) are designed for use alongside high-deductible health plans. They can assist you in covering your medical expenses. And 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. This is 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. Your big benefit is that you turn this otherwise taxable money into tax-free money when you use it for medical expenses.

How We Can Help

Sterling Tax and Accounting is here to help your business with tax planning! Our comprehensive approach to tax planning helps reduce your overall tax liability and keep more money in your pocket. If all your accountant does is file your taxes, chances are they are making you pay more than your fair share of taxes.

Learn how to proactively save on taxes by scheduling a call with our tax planning specialists.

Our tax planning, accounting & business services help you stay on track. Sterling Tax & Accounting will work with you to optimize your business and minimize your taxes. We will work to provide you and your business with the tools and resources you need to build a solid tax and business foundation. We’re a trusted CPA Firm in Sarasota, Florida. We serve clients all over the US, and proactively work to minimize their taxes.

Welcome to the Sterling Standard of business! Want to learn more? Schedule a meeting with our tax planning team here: https://www.srqtax.com/contact-us/