A Health Savings Account (HSA) is a tax-advantaged savings account that can be used for qualified medical expenses. Circumstances may arise where account holders wish to terminate their HSA. This process involves understanding the implications and following specific procedures depending on the custodian institution.
Terminating this type of account requires careful consideration due to its unique tax benefits. While primarily intended for healthcare costs, funds can be withdrawn for other purposes, although these withdrawals may be subject to income tax and penalties if the account holder is below a certain age. Understanding the implications of such withdrawals is crucial before proceeding with account closure.