HSA Rollover vs. Transfer: Understanding the Difference

Health Savings Accounts (HSAs) are an excellent way to save for medical expenses while enjoying tax benefits. When it comes to managing your HSA funds, it's important to understand the difference between an HSA rollover and transfer.

An HSA rollover involves moving funds from one HSA account to another, while an HSA transfer is the direct movement of funds from one HSA trustee to another, without you ever touching the money.

Here's a breakdown of the key differences between an HSA rollover and transfer:

• HSA Rollover:
• Involves withdrawing funds from one HSA account and then depositing them into another HSA account within 60 days.
• You can only do one rollover per twelve-month period for each HSA you own.
• The withdrawn funds must be deposited into the new HSA within 60 days to avoid tax penalties.
• HSA Transfer:
• Funds are transferred directly from one HSA custodian to another, without any involvement from you.
• There is no limit on the number of HSA transfers you can do, and they do not count toward your annual contribution limit.
• Transfers are a safer and more straightforward way to move HSA funds, as there is no risk of missing the 60-day deadline for rollovers.

Both rollovers and transfers are useful options for managing your HSA funds, but it's essential to understand the distinctions between them to avoid any potential tax consequences.

When considering your financial health, understanding the differences between HSA rollovers and transfers is crucial. A rollover allows you to withdraw funds from your HSA to deposit them into another within 60 days, offering flexibility as you manage your medical expenses.