can i roll roth ira into hsa ?

[Guest butrflychsr]

my brother-in-law says we can take $4000 out of my husbands roth ira to fund a hsa ?? i say he is wrong... what do you say??

[jevd]

my brother-in-law says we can take $4000 out of my husbands roth ira to fund a hsa ?? i say he is wrong... what do you say??

See article HERE

Here is the text of the legislation. It appears that only Traditional IRAs are eligible for this one time transfer.

Check with your tax professional or attorney.

SEC. 307. ONE-TIME DISTRIBUTION FROM INDIVIDUAL RETIREMENT PLANS TO FUND HSAs.

(a) In General- Subsection (d) of section 408 (relating to taxability of beneficiary of employees' trust) is amended by adding at the end the following new paragraph:

`(9) DISTRIBUTION FOR HEALTH SAVINGS ACCOUNT FUNDING-

`(A) IN GENERAL- In the case of an individual who is an eligible individual (as defined in section 223©) and who elects the application of this paragraph for a taxable year, gross income of the individual for the taxable year does not include a qualified HSA funding distribution to the extent such distribution is otherwise includible in gross income.

`(B) QUALIFIED HSA FUNDING DISTRIBUTION- For purposes of this paragraph, the term `qualified HSA funding distribution' means a distribution from an individual retirement plan (other than a plan described in subsection (k) or (p)) of the employee to the extent that such distribution is contributed to the health savings account of the individual in a direct trustee-to-trustee transfer.

`© LIMITATIONS-

`(i) MAXIMUM DOLLAR LIMITATION- The amount excluded from gross income by subparagraph (A) shall not exceed the excess of--

`(I) the annual limitation under section 223(b) computed on the basis of the type of coverage under the high deductible health plan covering the individual at the time of the qualified HSA funding distribution, over

`(II) in the case of a distribution described in clause (ii)(II), the amount of the earlier qualified HSA funding distribution.

`(ii) ONE-TIME TRANSFER-

`(I) IN GENERAL- Except as provided in subclause (II), an individual may make an election under subparagraph (A) only for one qualified HSA funding distribution during the lifetime of the individual. Such an election, once made, shall be irrevocable.

`(II) CONVERSION FROM SELF-ONLY TO FAMILY COVERAGE- If a qualified HSA funding distribution is made during a month in a taxable year during which an individual has self-only coverage under a high deductible health plan as of the first day of the month, the individual may elect to make an additional qualified HSA funding distribution during a subsequent month in such taxable year during which the individual has family coverage under a high deductible health plan as of the first day of the subsequent month.

`(D) FAILURE TO MAINTAIN HIGH DEDUCTIBLE HEALTH PLAN COVERAGE-

`(i) IN GENERAL- If, at any time during the testing period, the individual is not an eligible individual, then the aggregate amount of all contributions to the health savings account of the individual made under subparagraph (A)--

`(I) shall be includible in the gross income of the individual for the taxable year in which occurs the first month in the testing period for which such individual is not an eligible individual, and

`(II) the tax imposed by this chapter for any taxable year on the individual shall be increased by 10 percent of the amount which is so includible.

`(ii) EXCEPTION FOR DISABILITY OR DEATH- Subclauses (I) and (II) of clause (i) shall not apply if the individual ceased to be an eligible individual by reason of the death of the individual or the individual becoming disabled (within the meaning of section 72(m)(7)).

`(iii) TESTING PERIOD- The term `testing period' means the period beginning with the month in which the qualified HSA funding distribution is contributed to a health savings account and ending on the last day of the 12th month following such month.

`(E) APPLICATION OF SECTION 72- Notwithstanding section 72, in determining the extent to which an amount is treated as otherwise includible in gross income for purposes of subparagraph (A), the aggregate amount distributed from an individual retirement plan shall be treated as includible in gross income to the extent that such amount does not exceed the aggregate amount which would have been so includible if all amounts from all individual retirement plans were distributed. Proper adjustments shall be made in applying section 72 to other distributions in such taxable year and subsequent taxable years.'.

(b) Coordination With Limitation on Contributions to HSAs- Section 223(b)(4) (relating to coordination with other contributions) is amended by striking `and' at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting `, and', and by inserting after subparagraph (B) the following new subparagraph:

`© the aggregate amount contributed to health savings accounts of such individual for such taxable year under section 408(d)(9) (and such amount shall not be allowed as a deduction under subsection (a)).'.

© Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2006.

[JanetM]

That would be trying to take money that you have paid taxes on and moving to account that is funded with pretax money.

That doesn't make any sense.

[Guest allancoleman]

I agree with JanetM , butrfychsr . I have several Roths and a HSA and it doesn't make sense to take a taxfree forever investment vehicle and move it to a HSA even IF it is possible .

[John G]

On legality, I yield to the citation.

It sure does not make any sense to me. The Roth is a wonderful tax shelter. Why would you want to raid it to fund an HSA?