ASB HSA Application Download paper
The IRS allows a one-time rollover of funds from an IRA to an HSA. The amount rolled over applies towards meeting the annual HSA contribution limit. On June 4, the IRS released Notice 2008-51, providing guidance for these rollovers. (www.irs.gov/irb/2008-25_IRB/index.html)
The rollover amount is taxable and subject to a 10% penalty if the individual does not remain eligible to contribute to an HSA during the testing period. However, the guidance relieves employers and account trustees/custodians of any responsibility for determining whether an individual remains eligible during the testing period.
You may not take the usual tax deduction for HSA contributions for any funds transferred from your IRA and contributed to your HSA. However, once the IRA funds are deposited in the HSA, they may be used tax-free for qualified medical expenses. Had the funds remained in the IRA, the amount withdrawn would be subject to income tax. (and a 20% penalty if withdrawn before age 59-1/2)