QHFD: How to Take Advantage of Triple Tax Free Benefits

QHFD: How to Take Advantage of Triple Tax Free Benefits

| February 25, 2020

Qualified Health Funding Distribution (QHFD) - Move IRA Money to HSA Tax-Free

This little known trick can only be used once.

If you are eligible for an HSA in 2020, the limits for a family are $7,100 or $8,100 for a family over age 50. Generally we recommend maxing each year and investing the balance, while paying for your medical costs out of pocket. This is the best way to take advantage of the triple tax free benefits of an HSA - the only triple tax free investment vehicle in the USA. 

But what if you don't have the discretionary income to fund your HSA this year? Enter QHFD - problem solved! The QHFD is a tax-free rollover from your IRA to your HSA. It is the perfect solution for someone who wants to fund their HSA but can't for whatever reason. The best part is that we are taking money from the IRA and not paying the ordinary income or the pre-59 1/2 penalties! Unfortunately the QHFD can only be used once and we are subject to the contribution limits.



In this episode, Nick Hopwood, CFP® of Peak Wealth Management talks about the benefits of a Health Savings Account, or "HSA" for short. HSAs are superior compared to their predecessors because of the triple-tax-free benefits and they are not “use it or lose it.” They are becoming more and more important as our healthcare cost crisis continues, and I predict your HSA will play a significant role in the years to come. Listen in to find out why.