I have an IRA with pre & post tax $. I would like to make a one time rollover to my HSA. Can both types of $ be rolled over and how would it work for each type?

[BMcCalpin · Accepted solution]

You can make a trustee to trustee rollover from an IRA to an HSA ONLY ONCE in your lifetime. In your case, you would want to roll over only pre-tax dollars in the IRA to the HSA.

For your post-tax dollars, I would take a distribution from your IRA (which would be reported as income), but then you would make a "personal" (direct to the HSA) contribution with that distribution which would become a deduction on line 25 on Schedule 1 (Form 1040).

NOTE: both the IRA to HSA rollover AND the personal contribution (as well as any other contributions such as through an employer) are counted against your annual HSA contribution limit. That is, if the pre-tax amount in the IRA is alone more than your annual HSA contribution limit, then you will have excess contributions to your HSA, and have to report the excess as taxable income on Line 21 (Other Income) on Schedule 1 (Form 1040). This is important because it sharply limits how much you can contribute to your HSA with a rollover (especially since you can do this kind of rollover only once in your lifetime).

Generally, the annual HSA contribution limit is $3,450 for taxpayers with Self-only HDHP coverage and $6,900 for taxpayers with Family HDHP coverage. Taxpayers who are 55 or older receive a $1,000 increase in the limit of their personal HSAs.

[dmertz]

An HSA Funding Distribution (HFD) comes first from the pre-tax money in your IRA, so if you have a sufficient amount of pre-tax money in your traditional IRA to fund the HFD, the distribution comes entirely from pre-tax money.  HFDs are not reported on Form 8606.  If you have too little pre-tax money in the IRA to be applied to the HFD, do as TurboTaxBillMc suggests and claim only enough as HFD so that the taxable amount of the distribution calculated on Form 8606 is reduced to zero as a result of the calculation on Form 8606 showing that the remainder of the distribution was entirely from your after-tax basis in traditional IRAs.  (If, fact, I think it is impermissible to claim an HFD of more than the amount that would otherwise be taxable if you distributed all of your IRA funds during the year in which you make the HFD.)  Then report that remainder as a deductible HSA contribution.