Can you withdraw money from your HSA?

The quick answer is yes, but there’s a lot to consider before deciding to remove money from your HSA.

In this video, Curt explains HSA withdrawals and how some are completely tax-free and others may be subject to income taxes and penalties.

00:00 – Start
00:27 – HSA Recap
01:21 – Withdrawal for Qualified Medical Expense
03:05 – Withdrawal for a Non-Qualified Expense
03:59 – Withdrawals after Age 65
04:43 – Rollover to IRA or 401k (NOPE)
05:10 – Inherited HSAs
05:48 – Wrap Up

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Disclaimer: This video is for information and entertainment only. None of the contents should be considered legal, accounting, or other professional advice. You should reach out to a qualified professional before making your own financial decisions.

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Health Savings Accounts (HSAs) are a valuable tool for saving money for medical expenses. However, many people are unsure about the rules and regulations regarding withdrawing money from their HSA. Can you withdraw money from your HSA? The short answer is yes, but there are certain guidelines that must be followed.

First and foremost, it’s important to understand that HSA funds can only be used for qualified medical expenses. These expenses include things like doctor’s visits, prescription medications, and certain medical procedures. If you use the funds for non-qualified expenses, you may be subject to a penalty.

In order to withdraw money from your HSA, you will typically need to submit a reimbursement request to your HSA provider. This can usually be done online or by filling out a form and submitting it by mail. You will need to provide documentation of the medical expenses you are requesting reimbursement for, such as receipts or an explanation of benefits from your insurance company.

It’s also important to note that there are limits to how much you can withdraw from your HSA each year. In 2021, the annual contribution limit for individuals is $3,600, and for families, it’s $7,200. If you are over the age of 55, you can make an additional “catch-up” contribution of $1,000 per year. If you exceed these limits, you may be subject to taxes and penalties.

Another important factor to consider is whether you have a high-deductible health insurance plan (HDHP). In order to contribute to an HSA, you must be enrolled in an HDHP. If you change to a non-HDHP plan, you can no longer make contributions to your HSA, but you can still withdraw money for qualified medical expenses.

It’s also worth noting that if you withdraw money from your HSA for non-qualified expenses before the age of 65, you will be subject to income tax on the amount withdrawn, as well as a 20% penalty. After the age of 65, you can withdraw money for non-qualified expenses without penalty, but you will still be subject to income tax.

In conclusion, you can withdraw money from your HSA, but there are rules and regulations that must be followed. It’s important to use the funds for qualified medical expenses and to keep records of your expenses in case you need to provide documentation to your HSA provider. If you have any questions about withdrawing money from your HSA, it’s best to consult with a financial advisor or tax professional.