HSA Portability Help
Transfers: HSA assets may be transferred from one HSA to another HSA with the same or different trustee or custodian. Additionally, a former spouse may transfer HSA funds to his or her own HSA if awarded all or a portion of a former spouse’s HSA as part of a divorce settlement.
Rollovers: Assets from Archer MSAs and other HSAs may be rolled over into an HSA. To avoid confusion over where the rollover assets originated (i.e., from an MSA or HSA) trustees and custodians are advised to verify the source of HSA rollover contributions, and ask specific eligibility questions concerning timeliness of the rollover (i.e., made within 60 days) and the 12-month rollover restriction.
The Tax Relief and Health Care Act of 2006 permits a one-time option to take a “qualified HSA funding distribution” and directly move Traditional or Roth IRA assets to an HSA. The qualified HSA funding distribution is limited to the annual HSA contribution amount, and offsets any regular HSA contributions for that year. The HSA owner must remain HSA-eligible for 12 months following the month of the qualified HSA funding distribution. If the HSA owner does not remain eligible for 12 months (for reasons other than death or disability), the qualified HSA funding distribution amount must be included in income and a 10 percent testing-period failure penalty tax applies.