A direct rollover involves withdrawing funds from an HSA in the form of a check and then transferring (depositing) those funds with a new HSA provider. The account holder has 60 days from withdrawal to deposit the funds with a new custodian—or face a 20% income tax. The account holder is limited to one HSA rollover every 12 months.
A trustee-to-trustee transfer is when the initial health savings account provider makes a direct transfer to the new account provider. In this instance, the account holder never takes possession of the funds. There is no limit to the number of trustee-to-trustee transfers an account holder can make.1
Learn more about the 60-day rule and the benefits of the trustee-to-trustee transfer.
1. “About Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.” Internal Revenue Service, May 1, 2020. https://www.irs.gov/forms-pubs/about-publication-969.
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