Health Savings Accounts

Are Rollovers Permitted?

Unused balances in an HSA can accumulate and build from year to year. There is no "use it or lose it" provision as is the case with Flexible Savings Plans. These accounts are portable, and may be used by individuals who move from job to job.

Rollover contributions from Archer Medical Savings Accounts and other HSAs are permitted and are not subject to annual contribution limits. See the section How Much Can Be Contributed to an HSA. Only one rollover contribution may be made during a one-year period, and the amount must be contributed to the HSA within 60 days in order to be exempt from income tax and the additional 20% tax that applies to nonqualified distributions. However, there is no limit on the number of trustee-to-trustee transfers allowed in a year.

In addition, a one-time direct rollover of a health FSA or an HRA can now be made to an HSA. However, these rollovers are limited to the FSA or HRA account balance as of the rollover date or the account balance as of September 21, 2006, whichever is less. This provision is effective for transfers made on or after December 20, 2006, but before January 1, 2012.

And, effective for tax years beginning after December 31, 2006, eligible individuals can roll over funds directly from an IRA to an HSA once during their lifetimes. The contribution must be made in a direct trustee-to-trustee transfer.

IMPORTANT NOTE: The contribution cannot exceed the HSA contribution limit for that year. However, if a rollover is made during a month in which you have individual coverage as of the first day of the month, an additional rollover may be made during a later month within the year in which you have family coverage. This provision does not apply to Simplified Employee Pensions (SEPs) or to SIMPLE retirement accounts.

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*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. ("CFS"), a Registered Broker-dealer (Member FINRA/SIPC) and SEC-registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. General Electric Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.