Can I Withdraw HSA Funds the Following Year?

Many people often wonder if they can withdraw HSA funds the following year. The answer is yes, you can withdraw HSA funds in the following year. Health Savings Accounts (HSAs) are a beneficial way to save for future medical expenses while taking advantage of tax benefits. Here's how it works:

When you contribute money to your HSA, it belongs to you and stays in your account until you decide to use it. Unlike Flexible Spending Accounts (FSAs), there is no 'use-it-or-lose-it' policy with HSAs. This means that the funds you contribute to your HSA can roll over year after year, allowing you to accumulate savings for future healthcare expenses.

Here are some key points to keep in mind about withdrawing HSA funds:

• You can withdraw funds from your HSA at any time, even in the following year.
• There are no restrictions on when you can use the money in your HSA.
• Withdrawals used for qualified medical expenses are tax-free.
• If you withdraw funds for non-medical expenses before the age of 65, you may be subject to income tax and a 20% penalty.
• After the age of 65, you can withdraw funds for non-medical expenses penalty-free, but income tax will still apply.

Overall, HSA funds are flexible and can be used whenever you need them. It's essential to keep track of your medical expenses and save receipts for withdrawals, especially if you plan to use your HSA funds in the following year or later.

Yes, you can withdraw HSA funds in the following year, making HSAs a great long-term savings option for medical expenses. Unlike other accounts, your contributions can remain untouched, providing you with flexibility to use the funds when needed.