Yes1. You can make a once in a lifetime transfer from an IRA to an HSA. The transferred IRA amount + any HSA contributions for that year cannot exceed the annual contribution maximum2. In other words, your IRA transfer counts against your annual HSA contribution limit. This also means you must be covered under an HSA eligible health plan when doing this. Please see more information below.
Please note there is a special testing period for this kind of qualified funding distribution. The testing period is from the month you are eligible and contributed until the end of the 12th month of the next year, and you can contribute up to the total amount of the contribution limit for the year.
For example – you contribute to your HSA on June 13, 2018. You must be eligible to contribute to an HSA from June 1, 2018 - June 30, 2019.
Please be sure to consult with your tax professional. If it is not done properly, it can result in taxes and IRS penalties.
1: IRC Sec. 408(d)(9)
2: IRC Sec. 223(b)(4)(C)
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