BillM223
Expert Alumni

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Yes, you are allowed once in a lifetime a QFD (qualified funding distribution) from an IRA to an HSA.

 

However, this QFD is subject to the same rules as for contributions - they are counted against the annual HSA contribution limit. This limits the usefulness of the QFD because it means that you can move only up to $8,000 (if you are 55 or over and have Family HDHP coverage) to the HSA and that's only once in your lifetime.

 

Note that he cannot do the QFD once he goes on Medicare.

 

If I understand the situation correctly, you may trigger the extra questions for the last-month rule, because if he had an HSA in 2018 and contributed to it and used the last month rule, then he was required to stay under HDHP coverage for all of 2019, and Medicare doesn't count.

 

However, if he was under Family HDHP coverage for all of 2018, there won't be a penalty, because the last-month rule only makes a difference if you are not under HDHP coverage for all of the previous year (otherwise you qualified for the full year's annual HSA contribution limit, even without the last-month rule).

 

So if he triggers the last-month rule interview by answering "Family" to "What type of HDHP coverage did [name] have on December 1, 2018?", just answer the question and identify which months he had coverage in 2018.

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