Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
New Member
posted May 31, 2019 7:57:32 PM

On my HSA, I did not use funds for qualified medical expenses, is that considered prohibited transaction under the Distribution Code?

0 1 955
1 Replies
Level 15
May 31, 2019 7:57:33 PM

No, this is not a prohibited transaction.  It's a normal distribution subject to tax and, if under age 65, subject to penalty.

Prohibited transactions are those that disqualify the HSA from being an HSA, such as pledging the HSA assets as collateral for a loan.