HSA transfer in a divorce

[JennaMFP]

What is the name of your state (only U.S. law)? Ohio
The HSA is in my soon to be ex-husband's name. During the divorce settlement, I was awarded the entire amount. What do I need to do to get these funds transferred?

 

[Taxing Matters]

What is the name of your state (only U.S. law)? Ohio
The HSA is in my soon to be ex-husband's name. During the divorce settlement, I was awarded the entire amount. What do I need to do to get these funds transferred?

A Health Savings Account (HSA) is treated like an Individual Retirement Account (IRA) in this instance. The HSA would be rolled over into a HSA in your name. If the HSA is to remain with the same trustee that might be able to be done simply by having your ex complete a form with the trustee instructing the trustee to move the HSA into your name. Otherwise contact the trustee you intend to use to ask what is needed to set up the HSA and get the rollover done. I suggest you do a trustee to trustee transfer in that instance.

If the problem is that your ex is simply sitting on his butt and not taking action to get it done, you’ll want to contact him (or his lawyer) and make a polite but firm demand that your ex get on the ball and get the transfer done and let them know you will go back to court to enforce it if necessary. Then be prepared to follow through should it not happen.

 

[HRZ]

And be sure to get it done and or value locked in before it somehow gets spent by ex...

 

[JennaMFP]

Do you happen to know what kind of form that is? When I've talked to the company that holds the HSA right now they keep telling me that he has to completely close the account and give me the money. Then I open a new one in my name - taking the tax hit of course. It's like they've had this issue come up before!

 

[HRZ]

Google is a good place to start....and a taxable cash out is not a smart way to do it .

 

[JennaMFP]

Would it be a different trustee to trustee form depending on the bank it is through? And do I need something from a judge stating that it is to be transferred due to a divorce?

 

[HRZ]

MY lay guess would be to attach a copy of the divorce order ....

 

[LdiJ]

Do you happen to know what kind of form that is? When I've talked to the company that holds the HSA right now they keep telling me that he has to completely close the account and give me the money. Then I open a new one in my name - taking the tax hit of course. It's like they've had this issue come up before!

While I think that I agree with Taxing Matters as to how it is supposed to work, I personally have never encountered a divorce settlement that transferred an HSA to the other spouse. Therefore I have no experience of it in practice. With as many tax clients as our practice has, if we have never encountered an HSA transfer in a divorce, then odds are that not many happen. If not many happen, the plan administrators may be uncertain as to how to handle such transfers.
Hence their declaration that he needed to withdraw the money and give it to you.

You might want to consider consulting a tax professional who could research it and provide you hard evidence to provide to the plan administrators as to how it actually works.

 

[HRZ]

Google will get op to several sources re trustee to trustee transfer information...

 

[LdiJ]

Google will get op to several sources re trustee to trustee transfer information...

For HSA transfers specifically? If so, you might want to link one or two here.

 

[JennaMFP]

Yeah, my normal accountant had no clue, either! It's hard to believe this is not more common that this

 

[HRZ]

http://www.hsaedge.com/2016/10/08/how-to-rollover-hsa-funds/


I found several like this

 

[cbg]

Why does your lawyer not know the answer to these questions?

For that matter, why does the trustee of the HSA not know them?

Have you asked either of them?

 

[LdiJ]

http://www.hsaedge.com/2016/10/08/how-to-rollover-hsa-funds/


I found several like this

Yes, but there is nothing on that site about rolling over HSAs to another party in a divorce scenario. Those are all about rolling about your own HSA into another account of your own. What is really needed is something along the lines of a QDRO for an HSA.

 

[JennaMFP]

Correct, my issue has been transferring it from him to me. The HSA trustee has no clue because apparently it is not done very often. My lawyer hasn't dealt with this either and is asking around about it. HSA's have been around long enough that you would think someone has gone through this before. He is not supplying insurance for the kids (he doesn't have a job) so this is to help with that. If I leave it in his name, then he will end up using it for his hospital bills.