HSA question

[4tify]

I started an HSA this year with some earned income, but next year I begin my drawdown so I just wanted to double check I’m thinking about this right:

I’m 55 and plan to keep adding to HSA for 10 years. With no earned income I just divert dividends to the HSA, yes? And since there’s no earned income am I still eligible to deduct the HSA amount for tax purposes, right?

It seems this would allow for an extra $4850 for Roth conversion, correct?

Sorry but moving into the drawdown phase feels almost as complicated as starting the FI journey to begin with!

[seattlecyclone]

Earned income is not required for HSA contributions. What you will need to do is remain on an HSA-eligible health insurance plan. There's no limit on the amount of Roth conversions you can make every year, so it's not accurate to say HSA contributions "allow" you to do a bigger Roth conversion, but if your goal is to stay under a particular AGI then yes an HSA contribution will tend to cancel out a corresponding amount of Roth conversions.

[nalor511]

HSA contributing requires that your healthplan say "HDHP" or "HSA" in the name - that is all. No earned income requirement. If you weren't on "HSA/HDHP" healthplan for the 1st day of that month, then no HSA contribution for that month (1/12th of the yearly contribution). Simple as that.

[MDM]

HSA contributing requires that your healthplan say "HDHP" or "HSA" in the name - that is all.

Although that would be a good indication, the IRS considers that neither necessary nor sufficient.  The health insurance provider should know whether the plan meets the "HSA eligible" criteria that one can find in Publication 969. 

Other conditions, e.g., not having a spouse who uses a general purpose health flexible spending account, must also be met.  Again see Pub. 969.

[4tify]

Earned income is not required for HSA contributions. What you will need to do is remain on an HSA-eligible health insurance plan. There's no limit on the amount of Roth conversions you can make every year, so it's not accurate to say HSA contributions "allow" you to do a bigger Roth conversion, but if your goal is to stay under a particular AGI then yes an HSA contribution will tend to cancel out a corresponding amount of Roth conversions.

Copy that re: Roth size. Thanks!

[redcedar]

Correct on it doesn’t required earned income as others have noted. Unlikely as you would have mentioned them but make sure you don’t have any other disqualifying issues like Medicare income (more likely a disability thing than age thing given the info you shared), military tricare coverage, a spouse coverage of an fsa, a dependent on another’s tax return, etc. Unlikely but worth the check.

This is completely overkill, and a bit self serving to the hsa provider, but it’s still very informative….but check out hsaguidebook.com as a solid resource for hsa deep in the weeds information.