I have about $4800 left on my old HSA card/account (we got a new Ins plan). What tax penalties will I have to pay if I withdraw all or part of the funds?

[jdemann4]

The HSA company will charge my account a $4 monthly fee if I hold a balance of under $2500 so I will likely withdraw the full $4800

[HelenaC · Accepted solution]

Any funds you withdraw for non-qualified medical expenses will be taxed at your income tax rate plus 20% tax penalty if you’re under 65. If you are under age 65, 20% of $4,800 is $960. That is just the penalty. The $4,800 would get added to your income.

Once you turn 65, you can use HSA money for non-medical expenses without facing the 20% penalty, but you'll still owe income taxes.