HSA

All of this is true, of course, but doesn't apply just to HSAs. You've pointed out before how tax-deferred accounts can be overly used in some circumstances and how things can change out from underneath you.

-Will

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

"Gil Faver"

There's no question that this strategy contains a two-fold risk: (1) that the current law, albeit vague, is found to prohibit applying prior year expenses, and (2) the law might be changed before you could take advantage of the old rule. Personally, I'm more concerned about the former than the latter, but each person's take and risk assessments (not to mention the amount of money at risk) will differ.

What's distinctive is that HSA Bank's form asks the reason for the withdrawal. (Most banks require withdrawal forms if you go to them and ask for cash directly, as opposed to making a third party payment via check/debit card.)

I'm not convinced that HSA Bank's change was anticipatory. Rather, HSA Bank is using Evolution Benefits' debit card system, and Evolution Benefits (EB) had been pushing Congress on substantiation (not qualification) requirements. So seeing a client (HSA Bank) of EB conform to what EB was pushing may suggest nothing more than usual business pressure. Apparently EB only wanted legislation to promote its business, and not help the IRS collect money. When the House obliged with legislation, but went the obvious extra step of taxing unsubstantiated withdrawals, EB withdrew its support.

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.