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Why I made a “stupid” financial move – intentionally

On my previous post, I mentioned that we were debating making the switch from a PPO to an HSA. Thanks to all who commented! We’ve decided to go the HSA route, and what’s more, we’ve decided to use the option to roll over funds from an IRA to the HSA (we are contributing the maximum contribution for 2010 via the IRA transfer.)

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Many financial experts would consider this to be a stupid decision (we’re touching our retirement funds!), and usually I would agree. However, with our new arrival, Tiff isn’t working.. this means that money is very tight, and making this move allows us to not worry about health expenses at all for the next two years. Once our debt is paid down to a reasonable level, we’re planning on contributing 15%+ to retirement, so I’m not overly concerned that I’m taking $6000 away from the pool of money that can earn long-term compound interest.

If the IRA transfer had the regular penalties (even if it was just the 10% tax for early withdrawal), I would not have considered this – however, in this case, it lets us use our IRA funds with zero penalties. I was also able to sell funs in the IRA that was worth more than we paid for it.. I’d hate to be taking a loss on fund sales right now, as they would likely recover within the next few years.

In your opinion, is this a real boneheaded move, or is it reasonable in our situation? I’d love to hear what you think!

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