Investing in an HSA

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Topic Author
BadgerBrewer
Posts: 13
Joined: Tue Jun 26, 2012 6:55 pm

Investing in an HSA

Post by BadgerBrewer »

I have $5500 in an HSA at my local bank and it earns 0.05% interest. I want to transfer the funds to an HSA that I can use for tax-advantaged investing. I want an HSA custodian that has no fees (minimum account levels are fine) and has a fund with a low expense ratio that fits into the 3-Fund Portfolio. I don't need many investment options, because I can balance my other retirement funds accordingly.

Two questions:
1) What HSAs do you recommend for investing? (I have already looked over this list here http://www.bogleheads.org/wiki/Health_savings_account).
2) Before I can initiate a transfer, many HSAs require that I first open an account with them and deposit $100 into the account. I have already maxed out this year's contribution. Will that $100 count as a contribution and put me over my limit.

Regards,
--BB
boglesmkcents
Posts: 94
Joined: Tue Jul 24, 2012 4:57 pm

Re: Investing in an HSA

Post by boglesmkcents »

Regarding your first question, we have our HSA at Bancorp Bank, and have been very happy with it -- low fees, Streetscape Brokerage, etc. Many funds available with very low fees. Worth considering.

Not sure how to deal with the issue raised with your second question....
livesoft
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Joined: Thu Mar 01, 2007 7:00 pm

Re: Investing in an HSA

Post by livesoft »

I use HSABank. The minimum for no-fees is $4925 in the savings account, but keeping $5000 there gets you 0.25% interest. Thus amounts above $5000 can be invested via TDAmeritrade with no fees if you use their no-commission ETFs.

2. Yes, I think that $100 will put you over with the severe penalties for doing so.
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Topic Author
BadgerBrewer
Posts: 13
Joined: Tue Jun 26, 2012 6:55 pm

Re: Investing in an HSA

Post by BadgerBrewer »

They both look like better options than my current HSA. Thank you for the recommendations.
mich_bogle
Posts: 85
Joined: Mon Jun 02, 2014 3:54 pm

Re: Investing in an HSA

Post by mich_bogle »

I'm surprised no one has mentioned this place:

http://www.hsaadministrators.info/vanguard-funds-list

It seems to be the HSA company that is most closely aligned with Vanguard. I don't have an account but was planning on getting one on Jan 1 when my plan changes.
Leeraar
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Location: Nowhere

Re: Investing in an HSA

Post by Leeraar »

BadgerBrewer wrote:I have $5500 in an HSA at my local bank and it earns 0.05% interest. I want to transfer the funds to an HSA that I can use for tax-advantaged investing. I want an HSA custodian that has no fees (minimum account levels are fine) and has a fund with a low expense ratio that fits into the 3-Fund Portfolio. I don't need many investment options, because I can balance my other retirement funds accordingly.

Two questions:
1) What HSAs do you recommend for investing? (I have already looked over this list here http://www.bogleheads.org/wiki/Health_savings_account).
2) Before I can initiate a transfer, many HSAs require that I first open an account with them and deposit $100 into the account. I have already maxed out this year's contribution. Will that $100 count as a contribution and put me over my limit.

Regards,
--BB
I think you will be OK. Open the account with the $100, then transfer the money from the other account. Then, withdraw the $100 as an excess contribution. If you do so before the end of the year (or before next April 15) there should not be an issue besides a little complication in your tax return.

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")
Topic Author
BadgerBrewer
Posts: 13
Joined: Tue Jun 26, 2012 6:55 pm

Re: Investing in an HSA

Post by BadgerBrewer »

mich_bogle wrote:I'm surprised no one has mentioned this place:

http://www.hsaadministrators.info/vanguard-funds-list

It seems to be the HSA company that is most closely aligned with Vanguard. I don't have an account but was planning on getting one on Jan 1 when my plan changes.
My concern with HSA administrators is that they charge an annual fee of $45.
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MossySF
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Re: Investing in an HSA

Post by MossySF »

BadgerBrewer wrote:My concern with HSA administrators is that they charge an annual fee of $45.
$5000 @ 0.25% interest = $12.50

$5000 invested in stocks/bonds with expected return of 5% = $250

So to avoid the $45 annual fee, you are likely taking a net loss of $237.50. (Same trick with HSABank -- $5.50/mo in fees is still better than losing out on $250/yr in returns.)

The uglier part of HSA Administrators' fee schedule is the asset charge. At .0008 per quarter, that comes out to $108 at the $20K fee cap per fund.
jbreittling
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Re: Investing in an HSA

Post by jbreittling »

OptumBank. Charge $3/mo maint fee. Wish I could find a way around that fee. The Vanguard options made available (at least to me) are: VHGEX, VFINX and VWELX
Topic Author
BadgerBrewer
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Joined: Tue Jun 26, 2012 6:55 pm

Re: Investing in an HSA

Post by BadgerBrewer »

Wells Fargo also has an HSA. $2000 minimum in cash, $5000 total account level waives any fees, and they have WFIOX which tracks the S&P 500 and has a 0.25 expense ratio.
FB01
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Re: Investing in an HSA

Post by FB01 »

BadgerBrewer wrote:Wells Fargo also has an HSA. $2000 minimum in cash, $5000 total account level waives any fees, and they have WFIOX which tracks the S&P 500 and has a 0.25 expense ratio.
Exactly. I have put my HSA in WF in the same fund WFIOX
Thanks, | FB
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