Can a Distribution from a HSA Be Used as Part of a RMD?

If you're wondering whether a distribution from a Health Savings Account (HSA) can be used as part of a Required Minimum Distribution (RMD), the short answer is yes, but there are some important considerations to keep in mind.

HSAs are tax-advantaged accounts that are designed to help individuals save for qualified medical expenses. However, once you reach age 65, you can use the funds in your HSA for any purpose without penalty, although you will still owe income tax on the distribution.

When it comes to RMDs, the rules are a bit different. An RMD is the minimum amount of money that must be withdrawn from certain retirement accounts once you reach a certain age, usually starting at age 72. While HSAs are not subject to RMD rules during the account owner's lifetime, once the HSA owner passes away, the rules change.

If you inherit an HSA as a spouse, you have the option to treat it as your own HSA, in which case RMD rules will apply once you reach the age of 72.

It's important to note that while HSA distributions can be used for RMDs, there are potential tax implications to consider. Unlike traditional IRAs or 401(k)s, which are subject to both income tax and penalties if RMDs are not taken, HSAs are only subject to income tax on distributions if they are not used for qualified medical expenses.

In summary, a distribution from a HSA can be used as part of an RMD, but it's essential to understand the rules and potential tax implications before making any decisions.

Yes, you can use a distribution from your HSA as part of your Required Minimum Distribution (RMD), but let's explore the details that come into play.