I have a question about HSA accounts:
Imagine a scenario where I contribute $500 to a new HSA in February 2009 and then pay $1,500 in medical bills in July 2009 with money from a regular checking account. At the end of the year (December 2009) I contribute $2,000 to my HSA.
I now have $2,500 in my HSA. At the end of 2009, can I make a $1,500 distribution from my HSA to reimburse myself for my medical payments in June? Can I make this distribution tax-free with no penalties?
Can somebody please explain the underlying principles at work here?
Another way of asking my question is: Are distributions related to contributions? What are the time limitations between the two?
Thank you.
Imagine a scenario where I contribute $500 to a new HSA in February 2009 and then pay $1,500 in medical bills in July 2009 with money from a regular checking account. At the end of the year (December 2009) I contribute $2,000 to my HSA.
I now have $2,500 in my HSA. At the end of 2009, can I make a $1,500 distribution from my HSA to reimburse myself for my medical payments in June? Can I make this distribution tax-free with no penalties?
Can somebody please explain the underlying principles at work here?
Another way of asking my question is: Are distributions related to contributions? What are the time limitations between the two?
Thank you.