The IRS allowes a one-time rollover of funds from an IRA to an HSA. The amount rolled over applies towards meeting the annual HSA contribution limit. On June 4, the IRS released Notice 2008-51, providing guidance for these rollovers. (www.irs.gov/irb/2008-25_IRB/index.html)
This guidance brings two pieces of unexpected good news. First, individuals 55 and older can roll over enough funds to cover their catch-up and standard contributions. Second, individuals can rollover funds from not only a traditional IRA, but also from a Roth IRA, a simplified employee pension (SEP IRA), and a savings incentive match plan for employees of small employers (SIMPLE IRA). The SEP and SIMPLE IRAs must be inactive. No employer contributions can be made during the same year in which the rollover is made.

Rollovers are only permitted if the IRA and HSA account holder is the same person. Transfers to or from a spouse's accounts are not allowed. The guidance applies a testing period that must be satisfied when making this type of rollover. The testing period for these rollovers runs for 12 full calendar months after the month in which the rollover is completed.
The rollover amount is taxable and subject to a 10% penalty if the individual does not remain eligible to contribute to an HSA during the testing period. However, the guidance relieves employers and account trustees/custodians of any responsibility for determining whether an individual remains eligible during the testing period.