If you’re wanting to move your HSA funds around, it’s a good idea to know the HSA rollover rules. By keeping these rules in mind, you can move your funds around with the least resistance and penalties possible. Here are the various HSA rollover rules you should know.

General HSA Rollover Rules

Roll Over to a Different Provider

If you’re wanting to switch HSA accounts and transfer funds from your old one, the process is actually pretty simple. Contact your current HSA provider and ask them to establish a trustee-to-trustee transfer. Then you simply fill out a form — online or that they send in the mail — and wait for your funds to transfer. If you have your HSA funds invested, however, the HSA rollover rules aren’t quite the same.

Rollover With Invested Funds

If your HSA has funds invested, you’ll want to set up an in-kind transfer. This isn’t always possible, however. If you’re unable to do an in-kind transfer, you’ll need to liquidate your investments and transfer your HSA funds to your new HSA account. Keep in mind that liquidating your investments might open you up to some taxes. If you’re unable to do an in-kind transfer, check your state tax stipulations to see the tax rules regarding HSAs, and consult a tax professional if things seem too complicated.

Employer Change

Remember, your HSA isn’t tied to your employer even if you opened it up through its program. However, if you still wish to change HSA providers when you move jobs, the standard trustee-to-trustee transfer will work.

Transferring From an IRA

If you wish to transfer money from an individual retirement account (IRA) to an HSA, the HSA rollover rules get a bit more complicated. Here are some things to keep in mind if you’re transferring money from an IRA:

• You’re only allowed to transfer from an IRA to an HSA once in your lifetime.
• It only works for traditional and Roth IRAs.
• Your accounts have to be in your name.
• You must pass a 12-month testing period after transferring, where you are covered by an HSA-eligible HDHP.
• Not adhering to these rules will result in tax penalties.

Also, you can’t transfer 401(k) funds to an HSA, but you can transfer 401(k) funds to an IRA and then follow the steps we’ve outlined above.

Choosing an HSA

Rolling over an HSA can take a bit of time depending on your circumstances, but it can often be worth it if you’re choosing a great provider to transfer to.

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