Roth IRA withdrawal and Trad IRA contribution in same year?

[pirsquared]

Correct, with the exception that you can only use them for medical expenses incurred after you establish your HSA. In my state the HSA is established on the date of the first contribution.

If you want to play the typical HSA game, you can contribute, invest the money, incur an eligible expense, then withdraw for the expense much later, after the money has been invested for years and hopefully grown. Put in $1K, have it grow to $2K, withdraw for a $1K expense, and now you have $1K extra that is completely tax free for other medical expenses. (If you need the tax / cash flow, well, this isn't as much of an option.)

LTC insurance premiums are medical expenses for the purposes of an HSA. Note that there are age-based limitations on how much you can deduct - see the information in Schedule A for those limits.

In addition to LTC stuff and ordinary medical stuff, generally OTC stuff also is eligible.

You generally should be able to contribute to an HSA for each month you are covered solely by an HSA-eligible plan. The annual limit is adjusted for inflation each year, but it's somewhere around $4K for single coverage, which is likely in your case since your husband is on Medicare. If/when you're over 55, you can add a $1K catchup contribution as well, for a total of $5K per year.

HSA contributions can also be made any time until tax filing the next year (like IRA contributions). So if you want to dial in your AGI exactly (something I usually do), you can contribute, say, $3K to your HSA during the year, then figure out your taxes in the spring, then make a top-off contribution of $387 or whatever to the HSA for the previous year to get your AGI to an exact dollar figure, assuming you got within $387 in December during your planning phase.

Thank you! This is all incredibly helpful information. A couple of questions: !) Can I contribute the whole &4150 at the beginning of 2024? 2) Apparently I can pay for my husband's medical expenses out of my HSA if we wanted to. Note that he does not have an HSA and now cannot contribute to one as he is on Medicare. The instructions for Form 8889, however, indicate that I cannot pay for his Medicare premiums from my HSA. The instructions also seem to imply that I cannot pay for his LTC premiums out of my HSA, although they do not state that directly. Another source said that I can pay for his LTC premiums out of my HSA, but I am not confident in a non-IRS source. Do you have any more info on this?

 

[SecondCor521]

Thank you! This is all incredibly helpful information. A couple of questions: !) Can I contribute the whole &4150 at the beginning of 2024? 2) Apparently I can pay for my husband's medical expenses out of my HSA if we wanted to. Note that he does not have an HSA and now cannot contribute to one as he is on Medicare. The instructions for Form 8889, however, indicate that I cannot pay for his Medicare premiums from my HSA. The instructions also seem to imply that I cannot pay for his LTC premiums out of my HSA, although they do not state that directly. Another source said that I can pay for his LTC premiums out of my HSA, but I am not confident in a non-IRS source. Do you have any more info on this?

1. Yes.

If for some reason you don't maintain HSA coverage for all of 2024, then you'd need to contact your HSA custodian to remove the prorated amount of contribution which you were not eligible for. In other words, although usually expressed as an annual maximum, it's really done on a monthly basis. (It has to be an administrative withdrawal; if you just distribute the money back to yourself it will be treated as a distribution and would be taxed not the way you would expect.)

As long as you put in $1 on January 1, 2024, then any medical expenses after that date are eligible, even if they are greater than the amount of your accumulated contributions. (Assuming HSA establishment rules are the same in your state as they are in mine.)

2. Yes, as long as you stay married to him and file MFJ with him. ;-)

And correct, his Medicare premiums are off limits in terms of HSA eligible expenses.

I agree with your assessment that you can't use your HSA to pay for his LTC premiums either based on the wording of the IRS instructions at https://www.irs.gov/publications/p969#en_US_2022_publink1000204086.

...

It sounds like you'll probably have enough medical expenses to use for any HSA contributions you make. Note that dental and vision expenses are also eligible, which can sometimes be large for older folks.

 

[pirsquared]

1. Yes.

If for some reason you don't maintain HSA coverage for all of 2024, then you'd need to contact your HSA custodian to remove the prorated amount of contribution which you were not eligible for. In other words, although usually expressed as an annual maximum, it's really done on a monthly basis. (It has to be an administrative withdrawal; if you just distribute the money back to yourself it will be treated as a distribution and would be taxed not the way you would expect.)

As long as you put in $1 on January 1, 2024, then any medical expenses after that date are eligible, even if they are greater than the amount of your accumulated contributions. (Assuming HSA establishment rules are the same in your state as they are in mine.)

2. Yes, as long as you stay married to him and file MFJ with him. ;-)

And correct, his Medicare premiums are off limits in terms of HSA eligible expenses.

I agree with your assessment that you can't use your HSA to pay for his LTC premiums either based on the wording of the IRS instructions at https://www.irs.gov/publications/p969#en_US_2022_publink1000204086.

...

It sounds like you'll probably have enough medical expenses to use for any HSA contributions you make. Note that dental and vision expenses are also eligible, which can sometimes be large for older folks.

Thanks! This is all very helpful. I don't post often but I read here frequently and have always appreciated how knowledgeable you are about these topics and how you point to actual IRS sources.

My thought is that I would contribute the whole $4150 at some point in the year (possibly right away) and then likely use about half for medical expenses (maybe more as I would use $600-700 for my LTC premiums and a hefty chunk for my contact lenses) and then let the rest grow to use for future health expenses. It is great that HSA funds do not have to be used within the year!

 

[SecondCor521]

Thanks! This is all very helpful. I don't post often but I read here frequently and have always appreciated how knowledgeable you are about these topics and how you point to actual IRS sources.

My thought is that I would contribute the whole $4150 at some point in the year (possibly right away) and then likely use about half for medical expenses (maybe more as I would use $600-700 for my LTC premiums and a hefty chunk for my contact lenses) and then let the rest grow to use for future health expenses. It is great that HSA funds do not have to be used within the year!

Thanks for the kind words. @cathy63 is better - if she and I say different things, assume she is correct.

Your plan sounds good.