HSA Rollovers: A Step-By-Step Guide

If you’re considering moving your health savings account (HSA) to a new provider, the good news is that the rollover process is relatively straightforward. The IRS allows account holders to move their money from one HSA to another through a rollover or direct trustee-to-trustee transfer. A separate rule also permits a one-time qualified funding distribution from an IRA to an HSA. And while you can’t move money directly from a 401(k) to an HSA, it is possible to first roll eligible 401(k) funds into an IRA and then later over to an HSA. We’ll review each method step by step and explain the relevant IRS rules.

Consider working with a financial advisor as you put together a retirement plan and make adjustments.

5 Ways to Rollover an HSA

Rolling over a health savings account can be a smart move, especially if you’re changing providers, switching jobs or looking for better investment options. There are a few different ways to move HSA funds. Each method comes with specific rules, timelines and potential tax implications.

1. Trustee-to-Trustee Transfer

The easiest and most secure way to initiate an HSA rollover is by contacting your current HSA provider. This might be a bank, mutual fund company or another financial institution. If you set up your HSA through your employer, the benefits department can direct you to the right contact.

Ask your provider to initiate a “trustee-to-trustee transfer” to move your funds to a new HSA account. Many providers let you complete this process online. If not, you can call and request a transfer form. Once you fill out that form and return it, your provider will handle the rest.

You may have heard that the IRS limits HSA rollovers to once every 12 months. That rule only applies to rollovers in which you receive the HSA funds before redepositing them. Trustee-to-trustee transfers are unlimited, and the IRS does not treat them as rollovers.

With an official rollover, your provider sends you a check or deposit. You then have 60 days to place those funds into your new HSA. If you do not complete the rollover within 60 days, the amount generally becomes an HSA distribution. Any portion of the amount that you do not for qualified medical expenses can be subject to federal income tax. An 20% additional tax applies as well, unless there is an eligible exception.

Trustee-to-trustee transfers help you avoid those risks and are generally easier to complete. If you follow the rules for either method, you won’t owe taxes on your transfer and it won’t count toward your annual HSA contribution limit.

Note that these steps apply to standard HSAs. If your funds are invested in securities like mutual funds or stocks, the process may differ slightly.

2. In-Kind Transfer

Many HSA providers, including mutual fund companies, offer accounts that function like investment portfolios. This means your HSA contributions can be invested in securities, such as stocks, bonds and exchange-traded funds (ETFs).

If you want to move these types of investments to another provider, you’ll need to request an in-kind transfer. This allows you to transfer the investments as-is, without selling them first. However, not all providers support in-kind transfers. If yours doesn’t, you’ll need to sell the investments, transfer the cash and then reinvest with the new provider.

Federal tax rules generally allow HSA rollovers to include property as opposed to just cash, and, as mentioned, direct HSA-to-HSA trustee transfers are not taxable. However, state treatment can differ from federal HSA rules. California, for example, does not generally conform to federal HSA tax treatment, so residents can face state tax consequences on HSA investment earnings and certain transactions.

To avoid unexpected tax issues, it’s a good idea to consult a tax professional or financial advisor. They can guide you through the rollover process and help you avoid costly mistakes.

3. Employer to Employer

An employee reviews their retirement and HSA rollover options upon changing employers.

If you opened your HSA through your employer and are changing jobs, the account is yours to keep. However, your new employer might use a different HSA provider, or you may prefer to switch to one of your own choosing.

In either case, follow the rollover steps outlined above. You can contact your current HSA provider and request a trustee-to-trustee transfer. Or, you might ask for a check and complete the rollover yourself. If you choose the latter, just be sure to deposit the funds into your new HSA within 60 days to avoid taxes and penalties.

4. IRA to HSA Funding Distribution

To move eligible IRA funds into your HSA, start by contacting your IRA provider. To qualify as an HSA funding distribution, the transaction must be completed directly from the IRA trustee to the HSA trustee.

The IRS generally only allows one IRA-to-HSA qualified funding distribution in your lifetime. The only exception to this is that you can make a second IRA-to-HSA funding distribution in the same year if you change your coverage from individual to family. In that case, the combined funding distributions cannot exceed the applicable family HSA contribution limit, including any catch-up contribution.

To avoid tax penalties in this distribution, here are the key rules to keep in mi nd:

Both the IRA and HSA must be in your name.
The distribution must come from a traditional IRA or Roth IRA. It cannot come from an ongoing SEP or SIMPLE IRA. These accounts are considered ongoing when an employer contribution is made for the applicable plan year.
The funding distribution counts toward your HSA contribution limit for the year, so other contributions from you or your employer reduce the amount that can be moved from the IRA.

Most importantly, you must pass the testing period. To do so, you must remain an HSA-eligible individual throughout the period, which begins the month you make the funding distribution and ends on the last day of the 12th month following that month. For example, if you complete the transfer on April 13, 2026, the testing period would end on April 30, 2027.

Failing to meet this requirement results in tax consequences. You’ll owe federal income tax on the transferred amount, plus a 10% penalty. The only exceptions are death or disability.

A qualified HSA funding distribution is not included in federal taxable income and is not deductible. Once the money is in the HSA, qualified medical expense distributions can generally be taken tax-free.

5. 401(k) to HSA Rollover

Technically, the IRS doesn’t allow you to roll over funds directly from a 401(k) into an HSA. But if you are eligible to roll money from a 401(k) into an IRA, you could complete that transaction first. Following that transfer, you could then make a qualified IRA-to-HSA funding distribution.

Note that the second transaction remains subject to the lifetime limit, annual HSA contribution limit and testing-period requirements described above.

HSA Transfer and Rollover Rules at a Glance

Tax treatment of HSA transfers depends on how the money reaches the new HSA. A direct HSA transfer, a 60-day rollover and an IRA-to-HSA funding distribution are separate transactions, each with different limits.

Method	Key Rule	Counts Toward HSA Contribution Limit?
HSA trustee-to-trustee transfer	Money moves directly between HSA trustees; no annual limit on transfers	No
60-day HSA rollover	Funds received by the owner must be deposited into an HSA within 60 days; generally limited to one during a one-year period	No
IRA-to-HSA qualified funding distribution	Direct IRA-to-HSA transfer; generally available once per lifetime	Yes
401(k) to HSA	No direct rollover permitted; eligible funds would first need to move to an IRA	IRA-to-HSA amount counts toward the limit

These distinctions are important to note. Using the wrong method can change both the reporting requirements and the tax consequences. A direct HSA-to-HSA transfer generally offers the simplest route when the goal is only to change HSA providers.

How to File an HSA Rollover

HSA rollovers are reported on IRS Form 8889. On line 14b, fill out the total amount you rolled over or transferred from any eligible account into an HSA account. You should also record the total amount of distributions you made during the tax year, including the HSA rollover, on line 14a.

Of course these days, the best tax software can make this process seamless.

Common Reasons for an HSA Rollover

There are a two main reasons to consider an HSA rollover. One is to consolidate multiple HSAs into a single account. This can make it easier to manage your funds.

Another common reason is to reduce costs, as rolling over to a new provider may offer lower fees than your current HSA. In particular, there are two of the fees you may be able to reduce with a rollover: the fund’s expense ratio and any maintenance or custodial fees you may pay.

Bottom Line

A man fills out Form 8889 to report an HSA rollover.

Don’t let hesitation keep you from rolling over your HSA funds into a better account. You can contact your original HSA provider and request a trustee-to-trustee transfer. This process bypasses the “rollover once every 12 months” rule. Plus, it doesn’t reduce your HSA maximum contribution limit for the year.

In addition, you can roll over funds from your IRA to an HSA using the same process. This, however, will reduce your annual contribution limit. Nonetheless, it’s like turning tax-deferred money into tax-free money for eligible medical expenses.

Tips on Conducting an HSA Rollover

A financial advisor can help guide you through the complexities of conducting an HSA rollover. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Not sure where to roll over your HSA funds? As long as you keep your HSA-eligible HDHP coverage, you can open one at almost any bank. But the choice can be difficult with so many options. To help you out, we published our report on the best banks in America.