Hypothetical Situation - Distribution from Inherited IRA vs HSA

[Allen]

Lets say you had a $3,000 medical expense and had no emergency fund or other way to cashflow it.

If your choices are to either take the expense out of your HSA *or* out of an inherited IRA which is the better choice?  The inherited IRA would have a required minimum distribution anyway so you are going to take the money out either way.

My thinking is to take your RMD but then save the receipt so you can also reimburse yourself from the HSA at a future date.  The alternative is to just take it out of the HSA then put your RMD into a taxable savings account (assume you are also already maxing your IRA in this scenario)

Someone who can max their IRA is unlikely to also be unable to afford the $3,000 medical expense with cash, but I want to understand which would be better.

[Stairway to Stache]

I think you have already answered your question. Yes, take your RMD, you have to take it anyway like you said. Use that cash for replenishing your savings, then tap your HSA for the 3k medical expense. That's what the HSA is for anyway. If you say, well actually i already have plenty of savings okay great, use the money from the RMD to contribute to your HSA and make sure your still maxing out your HSA and IRA contributions. This saves you the most on taxes, but just remember to take care of your immediate savings needs first