SH wrote:
I have been doing this for ~10 years now. I max out my HSA contribution and then move the money from the HSA bank over to a brokerage firm where I can invest the money. I haven't taken any of the money out. Meanwhile, I have also been keeping track of my yearly medical, dental, and vision expenses. When it comes time, and I finally want to take that money out, I'm going to have proof of medical expenditure for all of it. I haven't checked my plan -- of taking most of the money tax free with documented medical expenses over the years -- with a lawyer, but it sounds like it's in the spirit of the law.
I don't believe you can pay for expenses in later years except for this (IRS NOTICE 2004-50):
An account beneficiary may defer to later taxable years distributions from HSAs to pay or reimburse qualified medical expenses incurred in the current year as long as the expenses were incurred after the HSA was established. Similarly, a distribution from an HSA in the current year can be used to pay or reimburse expenses incurred in any prior year as long as the expenses were incurred after the HSA was established. Thus, there is no time limit on when the distribution must occur.