Health Freedom for Seniors Act

Summary: Health Freedom for Seniors Act - Amends the Internal Revenue Code to allow tax-free transfers of required distributions after age 70 1/2 from an individual retirement account (IRA) and other tax-exempt retirement accounts to a health savings account.&nbsp; Exempts such transfers from the excise tax on excess contributions to tax-favored accounts and annuities.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Health Freedom for Seniors Act''.

SEC. 2. TRANSFER OF REQUIRED MINIMUM DISTRIBUTION FROM RETIREMENT PLAN 
              TO HEALTH SAVINGS ACCOUNT.

    (a) Transfer From Retirement Plan.--
            (1) Individual retirement accounts.--Section 408(d) of such 
        Code is amended by adding at the end the following new 
        paragraph:
            ``(10) Required minimum distribution transferred to health 
        savings account.--
                    ``(A) In general.--In the case of an individual who 
                has attained the age of 70\1/2\ and who elects the 
                application of this paragraph for a taxable year, gross 
                income of the individual for the taxable year does not 
                include a qualified HSA transfer to the extent such 
                transfer is otherwise includible in gross income.
                    ``(B) Qualified hsa transfer.--For purposes of this 
                paragraph, the term `qualified HSA transfer' means any 
                distribution from an individual retirement plan--
                            ``(i) to a health savings account of the 
                        individual in a direct trustee-to-trustee 
                        transfer,
                            ``(ii) to the extent such distribution does 
                        not exceed the required minimum distribution 
                        determined under section 401(a)(9) for the 
                        distribution calendar year ending during the 
                        taxable year.
                    ``(C) Application of section 72.--Notwithstanding 
                section 72, in determining the extent to which an 
                amount is treated as a distribution for purposes of 
                paragraph (1), the entire amount of the distribution 
                shall be treated as includible in gross income without 
                regard to paragraph (1) to the extent that such amount 
                does not exceed the aggregate amount which would have 
                been so includible if all amounts in all individual 
                retirement plans of the individual were distributed 
                during such taxable year and all such plans were 
                treated as 1 contract for purposes of determining under 
                section 72 the aggregate amount which would have been 
                so includible. Proper adjustments shall be made in 
                applying section 72 to other distributions in such 
                taxable year and subsequent taxable years.
                    ``(D) Coordination.--An election may not be made 
                under subparagraph (A) for a taxable year for which an 
                election is in effect under paragraph (9).''.
            (2) Other retirement plans.--Section 402 of the Internal 
        Revenue Code of 1986 is amended by adding at the end the 
        following new subsection:
    ``(m) Required Minimum Distribution Transferred to Health Savings 
Account.--
            ``(1) In general.--In the case of an individual who has 
        attained the age of 70\1/2\ and who elects the application of 
        this subsection for a taxable year, gross income of the 
        individual for the taxable year does not include a qualified 
        HSA transfer to the extent such transfer is otherwise 
        includible in gross income.
            ``(2) Qualified hsa transfer.--For purposes of this 
        subsection, the term `qualified HSA transfer' means any 
        distribution from an retirement plan--
                    ``(A) to a health savings account of the individual 
                in a direct trustee-to-trustee transfer,
                    ``(B) to the extent such distribution does not 
                exceed the required minimum distribution determined 
                under section 401(a)(9) for the distribution calendar 
                year ending during the taxable year.
            ``(3) Application of section 72.--Notwithstanding section 
        72, in determining the extent to which an amount is treated as 
        a distribution for purposes of paragraph (1), the entire amount 
        of the distribution shall be treated as includible in gross 
        income without regard to paragraph (1) to the extent that such 
        amount does not exceed the aggregate amount which would have 
        been so includible if all amounts in all eligible retirement 
        plans of the individual were distributed during such taxable 
        year and all such plans were treated as 1 contract for purposes 
        of determining under section 72 the aggregate amount which 
        would have been so includible. Proper adjustments shall be made 
        in applying section 72 to other distributions in such taxable 
        year and subsequent taxable years.
            ``(4) Eligible retirement plan.--For purposes of this 
        subsection, the term `eligible retirement plan' has the meaning 
        given such term by subsection (c)(8)(B) (determined without 
        regard to clauses (i) and (ii) thereof).''.
    (b) Transfer to Health Savings Account.--
            (1) In general.--Subparagraph (A) of section 223(d)(1) of 
        such Code is amended by striking ``or'' at the end of clause 
        (i), by striking the period at the end of clause (ii)(II) and 
        inserting ``, or'', and by adding at the end the following new 
        clause:
                            ``(iii) unless it is in a qualified HSA 
                        transfer described in section 408(d)(10) or 
                        402(m).''.
            (2) Excise tax inapplicable to qualified hsa transfer.--
        Paragraph (1) of section 4973(g) of such Code is amended by 
        inserting ``or in a qualified HSA transfer described in section 
        408(d)(10) or 402(m)'' after ``or 223(f)(5)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions made after the date of the enactment of this 
Act, in taxable years ending after such date.