Possible to rollover HSAs?

Submitted by Firm_Bit t3_127q8l0 in personalfinance

I have some $ in an HSA from a previous employer. I have some $ in an HSA from my current employer. Neither are great options IMO.

Can I open an HSA at a firm of my choice and roll over the old one and sweep in contributions from the new one on a regular basis?

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t-poke t1_jefapjk wrote

Yes, you can do that.

Open up an HSA at Fidelity (the only one of the big 3 brokerages that offers an HSA) and roll it over. My HSA provider sucks, so every quarter, I roll over my balance to an HSA at Fidelity. Just submitted my request this morning.

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sciguyCO t1_jefbos3 wrote

Yes, you can rollover your balance from one HSA to another, and this has no penalty or tax owed. You can have as many HSAs open as you want, and are not locked into the HSA that comes with your employer's plan. Your total annual contribution is still limited to $3850 individual / $7700 family across every HSA in your name. You probably can't do an automatic "sweep", though I suppose there might be HSA providers who allow that.

This has a couple potential downsides you'd have to balance. HSA providers almost always charge a "transfer fee" to move money from them to another HSA. This is usually around $25-35 per transfer. So doing this a lot is going to cost you more.

The IRS does allow you to do an "indirect rollover" where you simply withdraw from one HSA (incurring no fee), and do a "rollover deposit" into a second. As long as that deposit occurs within 60 days of the withdrawal and you report everything correctly on your tax return, then this also incurs no tax or penalty. But you're only allowed one indirect rollover every 12 months.

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wanttostayhidden t1_jefdt7e wrote

>HSA providers almost always charge a "transfer fee" to move money from them to another HSA. This is usually around $25-35 per transfer. So doing this a lot is going to cost you more.

I start the transfer from Fidelity to pull the funds out of the employer HSA account. I have never paid a fee. Since it is a direct transfer, I can do it multiple times a year.

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sciguyCO t1_jeff3s6 wrote

Interesting. Who is the bank for your employer's HSA? I wouldn't expect a fee to show up on Fidelity's side, but any chance you're pulling, say, $1000 over and the originating HSA is subtracting $1025 from your balance? Maybe Fidelity is able to cover that fee, refunding the amount charged into your deposit into their HSA.

Or maybe I've just been stuck with fee-heavy HSAs in my past jobs and this transfer fee is less common than I thought.

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wanttostayhidden t1_jefhsum wrote

It was Optum which is complete garbage. Now it's at a local credit union. We've never paid any fees when we've moved HSA money from either. No extra was withdrawn and the full amount was deposited into Fidelity.

I'm actually shocked Optum didn't hit us with a fee because they are so bad. They did hit us with a fee when we pulled the money when we totally closed the account.

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