Advanced Underwriting Consultants

Ask the Experts – February 17

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax questions posed by producers.  Here’s the question of the day.

Question: Are there any penalties for taking a distribution from an HSA? Are there any exceptions?

Answer: Distributions from an HSA are income tax-free if used to pay for or reimburse qualified medical expenses. Qualified medical expenses include those incurred by a spouse and dependents.

Non-qualified distributions are taxed as ordinary income and are generally subject to an additional 20-percent tax. The 20-percent penalty does not apply if the distribution is made after the account beneficiary dies, becomes disabled or reaches age 65.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.