What are the tax implications/penalties of cashing out an HSA before age 65? Also, is there any way for the withdrawal to count towards our 2018 income instead of 2019?

[dmertz]

Regular distributions from an HSA received before age 65 and not used for qualified medical expenses are subject to ordinary income tax plus a 20% additional tax.

To make the distribution nontaxable you can apply the distribution to any qualified medical expense incurred after the HSA was established as long as you were not otherwise reimbursed for that expense and you did not claim a Schedule A medical-expense deduction for that expense.

No, a regular HSA distribution in 2019 is not 2018 income, it's 2019 income.