Fund HSA from IRA withdrawal, no ACA Impact?

[qwerty3656]

So, if I am targeting $50k of income for ACA purposes (with some of that coming from withdrawing IRA money), there is no reason not to pull out 7k extra money and fund 7k of an HSA. So my gross income goes to $57k, but my MAGI income is still $50k, right.

If I'm already diping into IRA money, I can't think of any reason not to go ahead and take out more to fund the HSA? (I've already done the 1-time IRA to HSA transfer, so this would be an IRA withdrawal, followed by an HSA contribution). I'm over 59 1/2.

 

[Linney]

So, if I am targeting $50k of income for ACA purposes (with some of that coming from withdrawing IRA money), there is no reason not to pull out 7k extra money and fund 7k of an HSA. So my gross income goes to $57k, but my MAGI income is still $50k, right.

For ACA calculations it works as you describe above. I've been doing this for a couple years now. It allows you to "move" funds from your Traditional IRA to your HSA each year. You can move your max HSA contribution amount each year including any catchup amounts.

You have to have an HDHP medical plan to do this of course.

 

[SecondCor521]

The other thing to keep in mind is that the one-time QHD counts towards your HSA contribution maximum for the year. So for example, if you had family HSA coverage this year, you could do either a one-time QHD of $7K or a $7K contribution from taxable, but not both because doing both would put you over the family limit.

 

[audreyh1]

This thread confused me at first because I thought you were talking about an IRA direct transfer to an HSA transfer (which is a one time option and limited to a year max), But now I see you are talking about a regular IRA withdrawal, and then contributing part of it to an HSA account. Which conveniently makes it tax deductible again - very clever!

 

[zinger1457]

That's pretty much what I did for the first 12 years I was retired and using the 72t option on my IRA, made max contributions to my HSA, just switched to Medicare this year. It was also a tool to keep me under the ACA cliff which hasn't been a concern the last couple years, glad I don't have to fight that battle anymore, very stressful some years.