What is a qualified hsa funding distribution

molson · ‎June 1, 2019

Turbo tax is indicating that my wife's HSA had a qualified HSA funding distribution. What does that mean and how does it know that? My wife's 2018 contribution was not made from an IRA or from a "trustee to a trustee".

IreneS · ‎June 1, 2019

Please see Super User dmertz's answer below.

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dmertz · ‎June 1, 2019

A qualified HSA Funding Distribution (HFD) is a distribution from your traditional IRA that the IRA custodian pays directly to your HSA. It comes with a variety of restrictions and is generally the worst way to fund an HSA. It usually only makes sense if you have an immediate (or anticipated) need to use traditional IRA money for qualified medical expenses and you are under age 59½.

https://www.irs.gov/publications/p969#en_US_2018_publink1000204065