New to HSAs need help - HSA Bank (TD Ameritrade) + Cigna

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jbsmith05
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New to HSAs need help - HSA Bank (TD Ameritrade) + Cigna

Post by jbsmith05 »

So my open enrollment just started for 2019...I'm planning on moving to our HDHP+HSA, but I'm not clear on how the actual investing works - the reading material from HR doesn't detail what I'm looking to know.

- MONEY LOGISTICS: Is it just like having another bank account (like a Wells Fargo but at HSA Bank) where I have to manually move money from that account to TDA in order to invest? There's no payroll deduction that would directly deposit to TDA - am I understanding this correctly?

- FEES: Seems like in my research here on Bogleheads that HSA Bank is going to charge me a total of $5.50 per month unless I keep $5,000 with them in the bank account portion. Then TDA will charge me $6.95 per ETF trade, unless I use one of their commission free ETFs, so if I wanted to go with VTI it would make most sense to invest once a year, otherwise use SPTM (SPDR Total Stock Market) each month/pay period instead of letting money sit idle for months.

- MINIMUMS: HSA Bank requires me to have at least $1000 in the bank account before I can invest at TDA - is this true, or does that $5.50 monthly fee allow me to invest everything?

- TRANSFER: Does anyone know if HSA Bank charges a fee for a trustee-to-trustee transfer out? I can't seem to find this anywhere on their site Wondering if there's any way around not having to pay any fees by potentially using another custodian.
adman_c
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Joined: Sun Oct 16, 2016 8:35 pm

Re: New to HSAs need help - HSA Bank (TD Ameritrade) + Cigna

Post by adman_c »

I'm not entirely clear from your post whether your employer requires you to use HSA Bank. If so, disregard my recommendation below.

Otherwise, check out Lively. HSA with First-dollar investment at TDA for $30 per year. There's a few threads on it here on Bogleheads, including this one.

I have an account there and am happy with it (although I only touch it once a year to add funds).
Topic Author
jbsmith05
Posts: 193
Joined: Fri Apr 01, 2016 2:01 pm

Re: New to HSAs need help - HSA Bank (TD Ameritrade) + Cigna

Post by jbsmith05 »

adman_c wrote: Wed Oct 17, 2018 10:35 am I'm not entirely clear from your post whether your employer requires you to use HSA Bank. If so, disregard my recommendation below.

Otherwise, check out Lively. HSA with First-dollar investment at TDA for $30 per year. There's a few threads on it here on Bogleheads, including this one.

I have an account there and am happy with it (although I only touch it once a year to add funds).
I have to use HSA Bank to get the pre-tax payroll deductions. I can use another, but I have to do it all post- tax on my own manually, then reconcile at year end tax time.
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White Coat Investor
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Re: New to HSAs need help - HSA Bank (TD Ameritrade) + Cigna

Post by White Coat Investor »

jbsmith05 wrote: Wed Oct 17, 2018 10:05 am So my open enrollment just started for 2019...I'm planning on moving to our HDHP+HSA, but I'm not clear on how the actual investing works - the reading material from HR doesn't detail what I'm looking to know.

- MONEY LOGISTICS: Is it just like having another bank account (like a Wells Fargo but at HSA Bank) where I have to manually move money from that account to TDA in order to invest? There's no payroll deduction that would directly deposit to TDA - am I understanding this correctly?

- FEES: Seems like in my research here on Bogleheads that HSA Bank is going to charge me a total of $5.50 per month unless I keep $5,000 with them in the bank account portion. Then TDA will charge me $6.95 per ETF trade, unless I use one of their commission free ETFs, so if I wanted to go with VTI it would make most sense to invest once a year, otherwise use SPTM (SPDR Total Stock Market) each month/pay period instead of letting money sit idle for months.

- MINIMUMS: HSA Bank requires me to have at least $1000 in the bank account before I can invest at TDA - is this true, or does that $5.50 monthly fee allow me to invest everything?

- TRANSFER: Does anyone know if HSA Bank charges a fee for a trustee-to-trustee transfer out? I can't seem to find this anywhere on their site Wondering if there's any way around not having to pay any fees by potentially using another custodian.
I have this exact combination of firms.

On January 2nd, I transfer the max contribution from my checking account to the HSA. On January 3rd, I push it to TD Ameritrade (it's actually a little tricky to find the place on the HSA Bank site to do this). On January 4th, I buy VTI with it. I then forget about my HSA for the next year.

Sounds like yours runs through your employer (which is good for you), but I bet it's similar.
Last edited by White Coat Investor on Wed Oct 17, 2018 10:52 am, edited 1 time in total.
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linakin
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Re: New to HSAs need help - HSA Bank (TD Ameritrade) + Cigna

Post by linakin »

Your documentation should spell out some of these rules. From what I've seen though, usually it works as follows:

1. Paycheck deduction gets deposited to HSA bank.
2. If you want to invest, you need to manually send money over to TD Ameritrade.
3. The money usually sits in a money market account in TDA.
4. You buy ETF/Mutual Funds/Stocks yourself.
5. Usually you need to keep a minimum $ amount in HSA bank, which appears to be $5k for you.

Since it appears you're just starting, you may not get to invest anything till after the first year or when you're most of the way through the year till you build up enough in the account.

I believe you could roll over an IRA, but that's a different set of steps.
linakin
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Re: New to HSAs need help - HSA Bank (TD Ameritrade) + Cigna

Post by linakin »

jbsmith05 wrote: Wed Oct 17, 2018 10:49 am I have to use HSA Bank to get the pre-tax payroll deductions. I can use another, but I have to do it all post- tax on my own manually, then reconcile at year end tax time.
If you do post tax, I believe you are unable to deduct the FISA taxes, so it may be more beneficial to just deduct from your pay check.
Topic Author
jbsmith05
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Re: New to HSAs need help - HSA Bank (TD Ameritrade) + Cigna

Post by jbsmith05 »

thanks for the replies....let me ask if this flow is possible...

1) employer deposits to HSA Bank (so I can take the tax advantages now) - but just leave the money in HSA, don't invest it with TD
2) transfer the money out of HSA to Lively - once a month/quarter (is there a frequency limit?) presumably I do this by transferring the money to myself in my main checking account, then immediately transfer it to Lively....all via ACH
3) Invest immediately when funds available in TD via Lively


Is that possible - or is it too much effort for the cost...is there a tax filing implication to removing the money from HSA Bank and then putting it in Lively?
Cash
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Re: New to HSAs need help - HSA Bank (TD Ameritrade) + Cigna

Post by Cash »

Are you sure that there is a fee for using HSA Bank through your insurer? There is if you establish an account directly through HSA Bank, but for instance, there are no fees associated with my HSA Bank account through my insurer. So I usually transfer all but $100 of contributions from HSA Bank to TD quarterly.
Topic Author
jbsmith05
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Re: New to HSAs need help - HSA Bank (TD Ameritrade) + Cigna

Post by jbsmith05 »

Cash wrote: Wed Oct 17, 2018 5:11 pm Are you sure that there is a fee for using HSA Bank through your insurer? There is if you establish an account directly through HSA Bank, but for instance, there are no fees associated with my HSA Bank account through my insurer. So I usually transfer all but $100 of contributions from HSA Bank to TD quarterly.
That'd be great if that's the case - but I don't think I really will know until I'm in the plan in January. All indications online and material that I can find seem to point that there are fees - unless I carry a $5000 balance at HSA bank before moving anything to TD.
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jhfenton
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Re: New to HSAs need help - HSA Bank (TD Ameritrade) + Cigna

Post by jhfenton »

jbsmith05 wrote: Wed Oct 17, 2018 11:05 am thanks for the replies....let me ask if this flow is possible...

1) employer deposits to HSA Bank (so I can take the tax advantages now) - but just leave the money in HSA, don't invest it with TD
2) transfer the money out of HSA to Lively - once a month/quarter (is there a frequency limit?) presumably I do this by transferring the money to myself in my main checking account, then immediately transfer it to Lively....all via ACH
3) Invest immediately when funds available in TD via Lively


Is that possible - or is it too much effort for the cost...is there a tax filing implication to removing the money from HSA Bank and then putting it in Lively?
This is exactly what I do, exact that my employer deposits go to an HSA at Fifth-Third Bank. Fifth-Third does not charge for trustee-to-trustee transfers so I do roughly quarterly transfers to Lively. They mail a physical check to Lively's custodial bank. It takes about a week, week and a half--which is fast by industry standards. (I initiate the transfers at Lively. They fax the signed form to Fifth-Third to start the process. I leave $25.01-50 behind so that Fifth-Third doesn't close the account and charge a $25 closure fee.)

If HSA Bank charges for transfers, you can still do a rollover by withdrawing the money and re-depositing it with Lively, but you can only do one cash-in-hand rollover per 12 months.
Topic Author
jbsmith05
Posts: 193
Joined: Fri Apr 01, 2016 2:01 pm

Re: New to HSAs need help - HSA Bank (TD Ameritrade) + Cigna

Post by jbsmith05 »

jhfenton wrote: Thu Oct 18, 2018 8:01 am
jbsmith05 wrote: Wed Oct 17, 2018 11:05 am thanks for the replies....let me ask if this flow is possible...

1) employer deposits to HSA Bank (so I can take the tax advantages now) - but just leave the money in HSA, don't invest it with TD
2) transfer the money out of HSA to Lively - once a month/quarter (is there a frequency limit?) presumably I do this by transferring the money to myself in my main checking account, then immediately transfer it to Lively....all via ACH
3) Invest immediately when funds available in TD via Lively


Is that possible - or is it too much effort for the cost...is there a tax filing implication to removing the money from HSA Bank and then putting it in Lively?
This is exactly what I do, exact that my employer deposits go to an HSA at Fifth-Third Bank. Fifth-Third does not charge for trustee-to-trustee transfers so I do roughly quarterly transfers to Lively. They mail a physical check to Lively's custodial bank. It takes about a week, week and a half--which is fast by industry standards. (I initiate the transfers at Lively. They fax the signed form to Fifth-Third to start the process. I leave $25.01-50 behind so that Fifth-Third doesn't close the account and charge a $25 closure fee.)

If HSA Bank charges for transfers, you can still do a rollover by withdrawing the money and re-depositing it with Lively, but you can only do one cash-in-hand rollover per 12 months.

Great thank you!
PhrugalPhan
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Re: New to HSAs need help - HSA Bank (TD Ameritrade) + Cigna

Post by PhrugalPhan »

jbsmith05 wrote: Wed Oct 17, 2018 7:35 pm
Cash wrote: Wed Oct 17, 2018 5:11 pm Are you sure that there is a fee for using HSA Bank through your insurer? There is if you establish an account directly through HSA Bank, but for instance, there are no fees associated with my HSA Bank account through my insurer. So I usually transfer all but $100 of contributions from HSA Bank to TD quarterly.
That'd be great if that's the case - but I don't think I really will know until I'm in the plan in January. All indications online and material that I can find seem to point that there are fees - unless I carry a $5000 balance at HSA bank before moving anything to TD.
I too have an HSA with HSA bank through my employer. In my case I needed to have $2,000 before I could start investing in a number of mutual funds, but once that balance level was hit I can transfer as much money as I want to the broker (which oddly isn't TD Ameritrade) and carry as little as I want in HSA Bank. There are HSA Bank fees, but my employer either pays them or has negotiated them away (sorry, I don't know which in my case).
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