What Is the Penalty to Withdraw from an HSA? - All You Need to Know

Many people use Health Savings Accounts (HSAs) to save for medical expenses tax-free. However, there are rules and regulations to follow when it comes to withdrawing funds from your HSA.

One of the primary benefits of an HSA is that you can withdraw funds for qualified medical expenses without paying taxes. But what happens if you withdraw for non-qualified expenses?

When you withdraw funds from your HSA for non-qualified expenses before the age of 65, you will be subject to a penalty. The penalty is 20% of the amount withdrawn, in addition to paying income taxes on that amount.

It's essential to understand the penalties of withdrawing from an HSA to make informed decisions regarding your healthcare finances.

Health Savings Accounts (HSAs) are an excellent way to save on medical expenses, allowing for tax-free withdrawals when used for qualified medical expenses. However, if you're considering withdrawing from your HSA for non-qualified expenses, it's vital to know the potential penalties involved.