Employer Sponsored HSA Question

[ownyourfuture]

Have a friend who is considering retiring in 2023 @ age 57.
He has approximately $10,000 in his HSA account. If he retires in 2023 & opens an HSA eligible high deductible health care plan, would he be able to roll that $10,000 into it at some point ?

If the answer is yes, any tax benefits/disadvantages ?

Thanks

 

[Bigdawg]

Have a friend who is considering retiring in 2023 @ age 57.
He has approximately $10,000 in his HSA account. If he retires in 2023 & opens an HSA eligible high deductible health care plan, would he be able to roll that $10,000 into it at some point ?

If the answer is yes, any tax benefits/disadvantages ?

Thanks

I'm confused. If he retires (is no longer working) he cannot put money into an HSA account. He can use the 10K he has in his HSA to pay for a new (after retirement) high deductible health care plan. If he gets a new job and it offers a HDHCP he can roll his old 10k HSA into the new one and can also contribute to the new HSA.. Does that help?

 

[bingybear]

I'm confused. If he retires (is no longer working) he cannot put money into an HSA account. He can use the 10K he has in his HSA to pay for a new (after retirement) high deductible health care plan. If he gets a new job and it offers a HDHCP he can roll his old 10k HSA into the new one and can also contribute to the new HSA.. Does that help?

where did you see the bolded comment

one needs a compliant insurance

There are other things that can limit you.

 

[Aerides]

I'm retired and I contribute to an HSA account. I have an HSA eligible plan.

I didn't roll my old HSA over as the place where it's managed didn't allow for it, nor for me to continue to contribute to it myself.

I made a new one with Fido, and I am reimbursing from the old one first.

 

[cathy63]

I'm confused. If he retires (is no longer working) he cannot put money into an HSA account...

That's true for IRAs and Roth IRAs but not HSAs. Anybody can contribute to an HSA as long as they have health insurance that meets the requirements.

 

[ownyourfuture]

That's true for IRAs and Roth IRAs but not HSAs. Anybody can contribute to an HSA as long as they have health insurance that meets the requirements.

Correct.

 

[cathy63]

...I didn't roll my old HSA over as the place where it's managed didn't allow for it, nor for me to continue to contribute to it myself...

I don't think they can stop you from performing a rollover, though they can refuse to do it trustee-to-trustee. You just withdraw 100% of the funds from your old account and then deposit that amount in your Fido HSA within 60 days and tell them it's a rollover.

You can only do it this way once per year (or once per 12-month interval, I can't remember the specifics, but it doesn't matter if you're only consolidating two accounts). You'll get a 1099-SA from the old provider showing a normal distribution and a 1099-SA from Fido showing the rollover deposit. You file form 8889 with your tax return and the two amounts get reconciled there so you don't owe any tax.

 

[ownyourfuture]

I'm retired and I contribute to an HSA account. I have an HSA eligible plan.

I didn't roll my old HSA over as the place where it's managed didn't allow for it, nor for me to continue to contribute to it myself.

I made a new one with Fido, and I am reimbursing from the old one first.

This is what I was looking for.....Thanks
I'm retired and I contribute to an HSA account. I have an HSA eligible plan.
I do as well.

I didn't roll my old HSA over as the place where it's managed didn't allow for it, nor for me to continue to contribute to it myself.
I don't know who manages his current HSA, but I'll go ahead & assume they wouldn't allow a roll either.

I made a new one with Fido, and I am reimbursing from the old one first.
This was helpful as well. I was thinking maybe there's rules that don't allow you to have more than one HSA.

Just to be absolutely sure I understand. After he's retired, he can continue reimbursing himself from the old employer sponsored HSA, & also make annual tax deductible contributions to his 'new' high deductible health care eligible HSA ?

 

[ownyourfuture]

I don't think they can stop you from performing a rollover, though they can refuse to do it trustee-to-trustee. You just withdraw 100% of the funds from your old account and then deposit that amount in your Fido HSA within 60 days and tell them it's a rollover.

You can only do it this way once per year (or once per 12-month interval, I can't remember the specifics, but it doesn't matter if you're only consolidating two accounts). You'll get a 1099-SA from the old provider showing a normal distribution and a 1099-SA from Fido showing the rollover deposit. You file form 8889 with your tax return and the two amounts get reconciled there so you don't owe any tax.

Very helpful........thanks!

 

[ownyourfuture]

I'm confused.

I think I found my mistake.

Instead of this:
He has approximately $10,000 in his HSA account. If he retires in 2023 & opens an HSA eligible high deductible health care plan, would he be able to roll that $10,000 into it at some point ?

It should've been this:
He has approximately $10,000 in his HSA account. If he retires in 2023 & opens an HSA eligible high deductible health care plan, and a new HSA, would he be able to roll that $10,000 into the 'new' HSA at some point ?

 

[Bigdawg]

where did you see the bolded comment

one needs a compliant insurance

There are other things that can limit you.

"Have a friend who is considering retiring in 2023 @ age 57.
He has approximately $10,000 in his HSA account. If he retires in 2023 & opens an HSA eligible"

Right there.

 

[Bigdawg]

I think I found my mistake.

Instead of this:
He has approximately $10,000 in his HSA account. If he retires in 2023 & opens an HSA eligible high deductible health care plan, would he be able to roll that $10,000 into it at some point ?

It should've been this:
He has approximately $10,000 in his HSA account. If he retires in 2023 & opens an HSA eligible high deductible health care plan, and a new HSA, would he be able to roll that $10,000 into the 'new' HSA at some point ?

Yes

 

[Aerides]

I don't think they can stop you from performing a rollover, though they can refuse to do it trustee-to-trustee. You just withdraw 100% of the funds from your old account and then deposit that amount in your Fido HSA within 60 days and tell them it's a rollover.

You can only do it this way once per year (or once per 12-month interval, I can't remember the specifics, but it doesn't matter if you're only consolidating two accounts). You'll get a 1099-SA from the old provider showing a normal distribution and a 1099-SA from Fido showing the rollover deposit. You file form 8889 with your tax return and the two amounts get reconciled there so you don't owe any tax.

Thanks. It was a few years ago when I asked, and I may have interpreted that complexity as "nah", but it's worth the bother to take another look.

 

[ownyourfuture]

Thanks. It was a few years ago when I asked, and I may have interpreted that complexity as "nah", but it's worth the bother to take another look.

Definitely take another look.
I opened my HD healthcare eligible HSA @ HSA Bank in 2016.
When I tried to move it to Fidelity in 2018 ? They fought tooth & nail to prevent it.

Eventually it took a 3-way call between the bank, Fidelity, & myself.
With all the fees they charged, I can see why they didn't want to let me go