The problem of too much money in HSA

Your HSA passes to your surviving spouse. 

But if you both die, the HSA is cashed out as income to your heirs.  There is no ten years period to withdrawal like IRA, the cash out of inherited HSA is immediate in that year.  Your heirs could use HSA for their own medical expense FOR THAT YEAR, but that's it.  

So if you have too much money in HSA, the problem would be your heir will have a huge tax bill, possible paying top rate of 37%. 

Let's say you have 1 million leftover in IRA, your heirs has ten years to withdrawal, so every year they get 100K, even if they work and make $240K as a couple, taxable income at 340K is taxed only at top rate of 24%. 

However, if you have 1 million leftover in HSA, your heirs has to pay income tax on $1 million the year they receives the inheritance.  That's top rate of 37%. 

所有跟帖： 

• 感谢指教。过了65 岁，不管是否医疗费用，赶快把钱取出用掉，对吗？ -上海大男人- ♂ (0 bytes) () 12/14/2022 postreply 07:16:39

• 你想想这样和RMD还有什么区别？哈哈 -柠檬椰子汁- ♂ (404 bytes) () 12/14/2022 postreply 07:20:38

• 我忘了罚金和税金的区别，不交罚金要交税。 -上海大男人- ♂ (0 bytes) () 12/14/2022 postreply 07:26:17

• 可以一下子转许多吗？这样就少了许多RMD了 -slow_quick- ♂ (0 bytes) () 12/14/2022 postreply 07:59:46

• see above comment about inheritance tax rate -柠檬椰子汁- ♂ (0 bytes) () 12/14/2022 postreply 08:01:30

• 哈，麻烦传给下一代了，更麻烦 -slow_quick- ♂ (0 bytes) () 12/14/2022 postreply 08:02:48

• Do children pay inheritance tax for left over Roth after death? -Smilee- ♀ (0 bytes) () 12/14/2022 postreply 07:20:00

• Federal tax has no inheritance tax. -柠檬椰子汁- ♂ (2104 bytes) () 12/14/2022 postreply 07:29:43