As with other self-directed retirement plans, you have multiple options for adding funds to your health savings account (HSA). You could make HSA contributions or transfer funds from another HSA, but you can also utilize a little-known option once during your lifetime - Roll funds from an IRA or 401(k) into your HSA.
There are specific limitations investors must bear in mind when considering their one chance at an IRA-to-HSA rollover:
Given the time-sensitive nature of this strategy, you may benefit from weighing the pros and cons of an IRA-to-HSA rollover. You may pursue this funding mechanism if you incur a sudden health expense but don't have the HSA funds to help cover it. You may have to come up with your entire deductible if you don't have the cash on hand to make a quick contribution, unless you have the necessary funds in your self-directed IRA. The once-per-lifetime rule caters to emergency situations like these, so you may consider holding off on an IRA-to-HSA rollover until you feel it's truly warranted.
New Direction Trust Company does not recommend or endorse any particular course of action, but we do encourage a comprehensive due diligence process on the part of our clients. For more information about HSAs or your alternative investment options, please don't hesitate to give us a call at 877-742-1270 or send us an e-mail at firstname.lastname@example.org.