Estate planning at Optum Bank

Yes. After age 65, HSA funds can be withdrawn for any purpose without the 20% penalty (though withdrawals for non-medical expenses are subject to regular income tax, similar to a Traditional IRA). Withdrawals for qualified medical expenses remain tax-free at any age. This dual-purpose flexibility makes HSAs a powerful retirement savings vehicle. Optum Bank offers investment options through their mutual fund lineup to facilitate long-term growth.

Yes, but the tax treatment is generally unfavorable. If a trust (revocable or irrevocable) is named as HSA beneficiary, the account is treated the same as if the estate were the beneficiary -- the fair market value is included on the decedent's final Form 1040 (IRC 223(f)(8)(B)). This is significantly worse than naming a spouse, who would inherit the HSA tax-free as their own HSA. The recommended structure is to name your spouse as primary beneficiary and the trust (or individual non-spouse beneficiaries) as contingent. Designate the trust through optumbank.com by signing in, selecting Settings, then Beneficiaries, and providing the trust name, date established, and EIN.