After my employer switched from BenefitWallet HSA to HSA Bank, I transferred from BenefitWallet to HSA Bank. It was a bit of a pain, and it was difficult to get any knowledgable and consistent guidance from BenefitWallet, so I thought I would outline the steps if anyone else wants to do this. From end to end, this took around a month to complete.
Rollover or Trustee-to-Trustee Transfer?
First, you'll need to decide if you want to do a direct rollover or a trustee-to-trustee transfer. The latter is probably easier and less mistake-prone, but you'll pay a $25 fee to BenefitWallet (as of 1/1/2018). In hindsight, I almost wish I had done the transfer. All the hassle and phone calls and research I did to save $25 was not worth it. A direct rollover has no fee, but you'll do more of the work yourself and you'll also need to fill out an extra form when you file your taxes. Also, you can do at most one rollover per 12 month period. See this Finance Buff blog post for more: How To Rollover an HSA On Your Own and Avoid Trustee Transfer Fee.
Suppose you want to save $25 and do the rollover. Here are the steps.
Step 0 - make sure that you have your HSA checkbook. You might have gotten one when your account was opened. You'll need to write a check to the new HSA to rollover your money. If you don't have a checkbook, you can order one from BenefitWallet for around $5 or $10, or you can talk to them on the phone and convince them to send you one for free in order to close your account (which is what I did). See below for phone number.
Step 1 - ensure that you have no outstanding reimbursements processing through your BW HSA, so that your balance will be stable and not a moving target.
Transfer from Investment Account to Savings
In BW, transfer all of your investment balance into your HSA savings account. When I did this, I had a fairly high balance in my investment account, and it was 100% in stocks, so if I moved all this to the savings account which is essentially cash, that would throw off my overall portfolio asset allocation. So, on the same day that I transferred my HSA funds from the investment account to the savings account, I did an opposite transaction in my IRA, exchanging shares in a bond fund to a stock fund, so that my overall portfolio AA would not change.
The BW "investment platform" [sic] is very opaque and does not give you accurate and up-to-date information. Before I did my big transfer, I did a couple of smaller practice transfers (around $100) just to see how long it takes for a transaction to settle. I did this because I wanted to make sure that my offsetting IRA exchange would happen on the same day as the BW trade. In the end, it was hard to tell, but I am pretty sure the BW trade will happen on the same actual day you make it (as long as you do the trade early in the day -- I would do it before 3 PM ET).
It was harder than you might expect to simply transfer the funds from the BW investment platform to the savings account. I often got confusing error messages telling me that I am only allowed to transfer a certain amount, but when I try to transfer that amount, it tells me I am not allowed to do that. Quite frustrating. Eventually I managed to transfer everything into the savings, although it took several days for the online balances to actually show correct amounts.
Once I had all my money in the savings account, I waited for the end of the month when BW pays you some paltry interest. I did this because I didn't want to transfer all my money and then get a $3.00 interest payment.
Execute the Rollover
Then, I filled out my new HSA Bank "HSA rollover form" (not the separate "transfer" form) and wrote out a check from my BW HSA account, in the amount of my total BW HSA balance, payable to "My New HSA" (fill in whatever your new HSA is called). In the check's memo line, I wrote the account number of my new HSA account and also "60 day rollover" (this was advice from HSA Bank), and on the back, under the endorsement line, I wrote "Deposit only to XXXXXXXX" where "XXXXXXX" was the account number of my new HSA. I photocopied the check and the form. Then I mailed the form and check to the new HSA. I just mailed it regular postal mail but maybe I should have done it certified mail.
Presumably, your new HSA has some sort of "Rollover" form. Make sure you tell them you are doing a 60-day rollover and NOT an ordinary contribution --- this will keep your HSA money in its tax-protected status.
A few days later, I saw that in my new HSA, the check had posted because my balance went up. It took several days more to see the balance go to zero in my BenefitWallet HSA; I logged into BW each day to see when the balance went to $0.
Soon after, I invested the money in my new HSA and made offsetting exchanges in my IRA to get my overall portfolio AA where I wanted it to be.
Close the BenefitWallet Account
Finally, I called BenefitWallet to formally close my account. I believe you can do this only over the phone. Call 1-877-472-4200. There are no touch-tone prompts to get to an operator or to close your account. Just ignore the prompts; they will cycle through a couple of times and then it will transfer you to an operator. You'll need to tell them "I want to close my account" and they will take you through the process and then you'll finally be done.
Don't just ignore and walk away from your BW Account. If you don't formally close the account, you might get a low-balance charge and it could be a pain to deal with all that. Just call them up and close your account.
Tax Form 8889
As described in the Finance Buff post, you'll need to include a Form 8889 in your tax return. For me, this will be next year (2018) so I can worry about that a year from now...
In trying to figure all this out, I had to talk to BW several times on the phone. It was challenging. They are polite but nobody there seems to understand anything, you get different answers from different people to the same questions, they don't understand why you want to do a rollover (they keep trying to get you to do a transfer instead). I hope I never have to deal with BW again.
Also, don't expect to find any helpful information on this anywhere on BW's website. They obviously want to make it as difficult as possible to leave them.
I tried and tried to get BW to simply write a check payable to me, in the amount of my balance, but they wouldn't do it. They said it was because my balance was too high (around $35,000) and it was some sort of security precaution. I think this is why they mailed me a checkbook for free. So if you ask BW to write you a check to close out your account, you might not be able to do this. [I wanted them to write me a check so that I could deposit it into my own personal checking account, and then write a check to my new HSA from my checking account.]
Unless you are really motivated to save $25, I would not do the direct rollover. I would have done the trustee-to-trustee transfer if I had to do it again.
That being said, now that I know how this works, if I have to do this again, I will probably do a rollover if I have to move HSA custodians again.
Have a question about your personal investments? No matter how simple or complex, you can ask it here.
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