Best HSA for Vanguard investing

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills

Best HSA for Vanguard investing

Postby incu » Tue Jul 16, 2013 6:12 pm

After finishing the Bogleheads' book I am looking to set up an HSA to begin investing in vanguard fund/etfs. I have found many helpful articles on the subject but still have a couple questions:

1) I see the HSA contribution is due by april 15 of the following year, but when must the HSA qualified insurance plan go into effect? If I were to start the qualified plan on say Sept. 1 would I still qualify to contribute the full $3,250 for the current year?

2) It seems as though HSA Administrators & HSA Bank are widely accepted as the two best HSA plans for Vanguard purchases.
When opening a new account (limited to having a 3,250 balance for individual) and planning to fully invest wouldn’t it make sense to initially go with hsa admins $45 fee+10.40 mutual fund fee=$55.40 total – (10.40 being the yearly .0032 expense on $3,250) vs paying $66 to fully invest the balance with hsa bank?

In year 2 the total cost of HSA admins would end up around the $66 fee for using HSA Bank (assuming balance around $6,500)

After two years I can see the advantage of HSA bank, but for a brand new account with current fee structures HSA Administrators seems like the best option. I am aware of the $25 fee to change the account over, but am I missing anything else that is skewing my #'s? The way fees are changing it seems very likely that 2 years from now fees will be completely different anyway.

*Additional info: I am planning this account to be used as a long term tax shelter/emergency fund (I do not plan on using to fund medical expenses unless absolutely necessary, once I have built up enough medical receipts I will begin to use a portion of this account as my emergency fund, so I do not plan on any banking/debit accounts)
incu
 
Posts: 4
Joined: 16 Jul 2013

Re: Best HSA for Vanguard investing

Postby grabiner » Wed Jul 17, 2013 8:25 pm

Wlecome to the forum!

Wiki article link: Health Savings Account

Tax reference: IRS Publication 969, Health Savings Accounts and other Tax-Favored Health Plans

incu wrote:1) I see the HSA contribution is due by april 15 of the following year, but when must the HSA qualified insurance plan go into effect? If I were to start the qualified plan on say Sept. 1 would I still qualify to contribute the full $3,250 for the current year?


Publication 969 explains this. As long as you remain in the qualified plan through December 31, 2014, you may make a full contribution for 2013 even if you are only covered starting December 1. If you lose the qualified plan before the end of the year, you have made excess conttributions, and you will have to withdraw them (if still allowed) or pay a penalty.
David Grabiner
User avatar
grabiner
Advisory Board
 
Posts: 12292
Joined: 21 Feb 2007
Location: Columbia, MD

Re: Best HSA for Vanguard investing

Postby incu » Fri Jul 19, 2013 1:03 am

Thank you for the wiki link as well as the 969 form, both were exactly what I was looking for.
incu
 
Posts: 4
Joined: 16 Jul 2013

Re: Best HSA for Vanguard investing

Postby incu » Fri Jul 19, 2013 5:07 am

One final question I've come across.

I am self employed and operate as a corporation. Is there any benefit to employer funding through the corporation as opposed to contributing myself? I haven't been able to find anything suggesting that's the case, but just wanting to make sure I'm not missing anything.
incu
 
Posts: 4
Joined: 16 Jul 2013

Re: Best HSA for Vanguard investing

Postby Rainier » Fri Jul 19, 2013 5:55 am

incu wrote:One final question I've come across.

I am self employed and operate as a corporation. Is there any benefit to employer funding through the corporation as opposed to contributing myself? I haven't been able to find anything suggesting that's the case, but just wanting to make sure I'm not missing anything.


Yes, no payroll taxes.
- Bill
User avatar
Rainier
 
Posts: 794
Joined: 14 Jun 2012

Re: Best HSA for Vanguard investing

Postby hillman » Fri Jul 19, 2013 8:44 am

Rainier wrote:
incu wrote:One final question I've come across.

I am self employed and operate as a corporation. Is there any benefit to employer funding through the corporation as opposed to contributing myself? I haven't been able to find anything suggesting that's the case, but just wanting to make sure I'm not missing anything.


Yes, no payroll taxes.


But double check to make sure you qualify for the 'fringe benefit.' I believe that sole proprietors and shareholders, members, and partners >2% cannot receive the pretax benefit.

This link, which I cannot vouch for (and moderators, please delete if it is proven to be misinformation as I won't be back on the site today), discusses the various contribution situations:
http://www.tangohealth.com/posts/consum ... ributions/
hillman
 
Posts: 128
Joined: 7 Jun 2012

Re: Best HSA for Vanguard investing

Postby incu » Wed Jul 31, 2013 2:41 pm

Thank you very much, it seems as if I do qualify for the pre-tax benefits as well. This thread has been a tremendous help.
incu
 
Posts: 4
Joined: 16 Jul 2013


Return to Personal Finance (Not Investing)

Who is online

Users browsing this forum: docnews, MSNbot Media, texas409 and 44 guests