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Asked 10/12/2009
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Funding an HSA with 401k Withdrawal I am an early retiree and will soon be 59 1/2. I have no employment income but do have investment income. Can I withdraw funds from my 401k and use them to fund the HSA. In theory the funds are taxable (but not penalized) when withdrawn from the 401k so they would add to my AGI to be taxed, but by funding a HSA the amount (same as withdrawn) would be taken off my income for a net 0 income and my HSA would be funded. |
Answer 1/1 - Submitted 11/20/2009
After further investigation, I will answer my own question for others to see.
HSA's can only be contributed to if there is earned income despite the logic I proposed. However, there is a once-in-a-lifetime exception where you can fund the HSA with a IRA distribution up to your alowable contribution limit for the year.
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