How will you fund your Health Savings Account HSA for health expenses

You might not be surprised to find out that the employees of New Direction IRA all have the option of an HSA as part of the company benefit plan. Our family takes full advantage of that benefit option. With two young boys in the family, our healthcare expenses are particularly unpredictable.

Last year we found ourselves in the unfortunate position of emptying our HSA account before the year was done. Luckily we still had not made our 2009 contribution to the HSA, but our personal cash was also running short at the time. We decided to do a one-time rollover from an IRA to the HSA for our 2009 contribution. Anyone can use this tool to fund their HSA in a pinch (or otherwise) once in their lifetime. There’s still time to make your contribution for 2009, the deadline is April 15th, 2010. If you’ve already made your 2009 contribution you can make a 2010 contribution anytime between now and April 15th, 2011.

If your HSA and IRA accounts are both at New Direction IRA, and you would like to fund your HSA with a one-time rollover from an IRA, download and complete a distribution form and fax or mail it to our office. The funds will be moved from the IRA to the HSA account and the reporting will be handled by our office.

It’s always good to be aware of the tax documents you will receive in response to this type of rollover. For more information on these documents and how to understand them, read my follow-up blog post entitled ‘Who told the IRS I made a distribution?’ for a discussion of the 1099-R and 5498 reporting that happens with a rollover contribution to an IRA or from an IRA to an HSA.