What Happens If I Withdraw My HSA?

Health Savings Accounts (HSAs) are a valuable tool for managing healthcare expenses, but it's important to understand the rules and implications of withdrawing funds from your HSA. If you withdraw money from your HSA for qualified medical expenses, the withdrawal is tax-free. However, if you withdraw funds for non-qualified expenses, you may face taxes and penalties. Here's what you need to know:

When you withdraw money from your HSA:

• If the withdrawal is for qualified medical expenses, you won't owe any taxes or penalties.
• If the withdrawal is for non-qualified expenses, you will owe income tax on the amount withdrawn, plus a 20% penalty if you're under 65.

It's important to keep receipts for all your qualified medical expenses, as these will be needed to prove the withdrawals were for qualified purposes. Additionally, if you're over 65, you can withdraw funds for non-medical expenses without penalty, though income tax will still apply.

Ultimately, using your HSA funds wisely can help you save for healthcare costs both now and in the future. Be sure to understand the rules and seek advice from a financial advisor if you have questions about withdrawing from your HSA.

Understanding the implications of withdrawing funds from your HSA can be a game changer for your financial planning. When using your HSA to cover qualified medical expenses, the funds you've accumulated can truly work for you, tax-free!