HSA Contribution

doneat54

Thinks s/he gets paid by the post
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I have an HSA at Fidelity that I opened contributed to Dec of 2023. I want to make my 2024 contribution now and Fidelity will not let me make a contribution from a pre-tax retirement IRA. It will let me make it from a post tax, brokerage account. Not sure why and it seems to me that when I was w*orking, I could contribute using pre-tax, payroll deductions. So why then shouldn't I be allowed to make contributions from a pre-tax IRA? It's not THAT much money, so I have no problem using post tax money. Looking at my account history at Fidelity, it looks like it was a "cash" contribution in 2023. One theory is that the rules are different now that I am retired (since 2017) and I can invest and manage (and grow) the HSA as an independent account at Fidelity. And the withdrawals from it, if used for medical expenses, are not taxed. Am I missing something?
 
Why would you contribute pre-tax IRA? The biggest selling point is not requiring payment of SS, FICA & fed taxes on contributions.
 
Use post-tax money which reduces your AGI at tax time. What benefit is there to you to do the initial roll-over from an IRA? Short of post-tax funds perhaps? You have until April 15 2025 to make the contribution for 2024 if that helps.
 
And when you file your taxes and use Form 8889, that post tax money will turn into pre-tax due to deducting the contribution from your income.
This is what I was thinking. Even though you would take taxable distribution from your IRA, you would just move it to the HSA and that would negate the taxes, right?

Flieger
 
This is what I was thinking. Even though you would take taxable distribution from your IRA, you would just move it to the HSA and that would negate the taxes, right?

Flieger
You can do a sort of rollover directly so no taxable distribution. One time. But it’s limited to the current year contribution limits and the only reason I can think to do such a thing is being short on taxable funds.
 
I assume you have an HSA qualified high deductible medical plan; otherwise, you cannot contribute to your HSA.
 
And when you file your taxes and use Form 8889, that post tax money will turn into pre-tax due to deducting the contribution from your income.

This is what I was thinking. Even though you would take taxable distribution from your IRA, you would just move it to the HSA and that would negate the taxes, right?
You could, but why? In other words, why not take money from a taxable account and put that into the HSA (assuming an HSA contribution is allowed)?
 
You could, but why? In other words, why not take money from a taxable account and put that into the HSA (assuming an HSA contribution is allowed)?
I think the HSA being allowed is assumed. If so:

If your "income" is solely from an IRA or other Tax Deferred Account? I could see moving from your IRA to an HSA for the additional tax benefit of no tax on withdrawals, much like a Roth (except you never pay tax on the contribution so you get the "triple" benefit.

Flieger
 
Use post-tax money which reduces your AGI at tax time. What benefit is there to you to do the initial roll-over from an IRA? Short of post-tax funds perhaps? You have until April 15 2025 to make the contribution for 2024 if that helps.

OP posted an interesting question. One of the reasons could be short on post-tax like you say, but another reason could be a tiny reduction in their IRA balance. I don't know which way would be more beneficial. Isn't it a wash for this one-time scheme? If you pay with post-tax $ and get a tax break on the current years taxes. If you choose to pay with the pre-tax money, you don't need to take money from the IRA and pay taxes or maybe have a chance to fill up more $ in their low marginal tax bracket for a Roth Conversion or living expenses.
 
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