HSA How do I invest?

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Jtf6
Posts: 49
Joined: Tue Mar 04, 2014 10:05 pm

HSA How do I invest?

Post by Jtf6 » Sat Nov 10, 2018 9:59 am

Last year, I opened up an HDHP from GEHA (I'm a federal employee). I was contributing $75 a pay period last year while my employer contributed as well. I have about $2k sitting in the HSA Bank. My deductible is $1500, so if I do have an unforeseen medical expense, I can cover the deductable from my balance.

In 2019 I plan on maxing out my HSA (I already max out my TSP and Roth). I want to invest my HSA contributions but not sure of the best way to go about it. I have a T Ameritrade account. I heard that I can transfer money from the HSA Bank to Ameritrade. Once I do that, where would I invest my money? Is there an equalivent to a total stock market fund there? Also how would I make regular contributions to the fund? Can I set up automatic deductions from my HSA Bank? Is it even wise to invest in a down market when I already maxing out my other tax advantaged accounts?

All advice welcomed!

Miriam2
Posts: 2329
Joined: Fri Nov 14, 2014 11:51 am

Re: HSA How do I invest?

Post by Miriam2 » Sat Nov 10, 2018 7:57 pm

Jtf6 wrote: Last year, I opened up an HDHP from GEHA (I'm a federal employee). I was contributing $75 a pay period last year while my employer contributed as well. I have about $2k sitting in the HSA Bank. My deductible is $1500, so if I do have an unforeseen medical expense, I can cover the deductable from my balance.

In 2019 I plan on maxing out my HSA (I already max out my TSP and Roth). I want to invest my HSA contributions but not sure of the best way to go about it. I have a T Ameritrade account. I heard that I can transfer money from the HSA Bank to Ameritrade. Once I do that, where would I invest my money? Is there an equalivent to a total stock market fund there? Also how would I make regular contributions to the fund? Can I set up automatic deductions from my HSA Bank? Is it even wise to invest in a down market when I already maxing out my other tax advantaged accounts?

All advice welcomed!
Hi Jtf6,
This may or may not help - but does your HSA Bank have an investment portion? My son has an HSA and his HSA bank (BNY Mellon) simply has buttons that he uses to transfer funds from his savings/bank/deductible portion to the investment portion of the account at BNY. Fortunately, he has the Vanguard S&P 500 index fund at .04 ER, so he just moves whatever he can into that account, leaving the necessary $1,000 in the bank portion.

Jtf6
Posts: 49
Joined: Tue Mar 04, 2014 10:05 pm

Re: HSA How do I invest?

Post by Jtf6 » Sun Nov 11, 2018 8:51 am

Thanks for the response. HSA Bank seems to be just a repository to hold my contributions. TD Ameritrade is the investment tool that is linked to HSA Bank.

Miriam2
Posts: 2329
Joined: Fri Nov 14, 2014 11:51 am

Re: HSA How do I invest?

Post by Miriam2 » Sun Nov 11, 2018 12:19 pm

Jtf6 wrote: I want to invest my HSA contributions but not sure of the best way to go about it. I have a T Ameritrade account. I heard that I can transfer money from the HSA Bank to Ameritrade. Once I do that, where would I invest my money? Is there an equalivent to a total stock market fund there? Also how would I make regular contributions to the fund? Can I set up automatic deductions from my HSA Bank?
It seems to me you need to look at your HSA plan documents to answer all these questions, then you need the list of approved funds that you can invest in. If you can invest in any TDAmeritrade fund or TDAmeritrade-offered fund, your plan documents should specify that.
Is it even wise to invest in a down market when I already maxing out my other tax advantaged accounts?
I would, it's like hitting the sale rack at Macy's :happy

Chrono Triggered
Posts: 49
Joined: Wed Feb 17, 2016 12:55 pm

Re: HSA How do I invest?

Post by Chrono Triggered » Sun Nov 11, 2018 1:59 pm

I'm a fed with a GEHA HDHP plan invested in HSAbank/TDameritrade.

Yes, you can automatically have excess monies past a certain amount to automatically transfer to your set up TD account. I think the lowest threshold is everything after $100. You can then invest in anything TD offers. The commission free ETFs consist of State Street funds, which I invest in.

Side note, but if you're able to max out all your tax deferred space and can pay your deductible out of pocket, it's worth looking into. You can take out money in your HSA for any health expenses, even if they occurred in the past, while your HSA grows tax free.

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grabiner
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Re: HSA How do I invest?

Post by grabiner » Sun Nov 11, 2018 4:22 pm

Jtf6 wrote:
Sat Nov 10, 2018 9:59 am
Last year, I opened up an HDHP from GEHA (I'm a federal employee). I was contributing $75 a pay period last year while my employer contributed as well. I have about $2k sitting in the HSA Bank. My deductible is $1500, so if I do have an unforeseen medical expense, I can cover the deductable from my balance.

In 2019 I plan on maxing out my HSA (I already max out my TSP and Roth).
Max out for 2018 first; you can do this through April 15, 2019, as long as you designate the contributions as for 2018. (You may not be able to do this by payroll deduction; if so, you can contribute by check and deduct it from your taxes, although you won't get the FICA reduction.) That should be another $750 to contribute.

The reason to do this is that the HSA is a better investment than an IRA or TSP: you get a deduction on contributions, and pay no tax on withdrawals if they are used for medical expenses.

As for how to invest it, you can use the TD Ameritrade account to invest in almost anything. Treat the HSA as part of your IRA for investment purposes, and choose an ETF which meets your needs. (If you live in AL, CA, or NJ, pay attention to tax efficiency, as these states do not recognize HSAs. My usual recommendation is to hold a Treasury fund, but you might not want to do that as a government employee because you can hold all your bonds in the G fund. You can still hold a tax-efficient ETF such as a total-US-market fund.)
Wiki David Grabiner

Bfwolf
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Joined: Thu Oct 14, 2010 11:19 am

Re: HSA How do I invest?

Post by Bfwolf » Sun Nov 11, 2018 4:41 pm

You can open an HSA investment account with TD Ameritrade through the Investment link on your HSA Bank account.

TD Ameritrade has some commission free ETFs which are perfect for an HSA where you may be investing relatively small amounts frequently. SPTM is the Total Stock Market ETF.

https://research.tdameritrade.com/grid/ ... onfree.asp

RickBoglehead
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Joined: Wed Feb 14, 2018 9:10 am

Re: HSA How do I invest?

Post by RickBoglehead » Sun Nov 11, 2018 6:16 pm

Bfwolf wrote:
Sun Nov 11, 2018 4:41 pm
You can open an HSA investment account with TD Ameritrade through the Investment link on your HSA Bank account.

TD Ameritrade has some commission free ETFs which are perfect for an HSA where you may be investing relatively small amounts frequently. SPTM is the Total Stock Market ETF.

https://research.tdameritrade.com/grid/ ... onfree.asp
Right. OP's existing TD account is irrelevant.

annebert
Posts: 23
Joined: Fri Jul 20, 2018 5:39 pm

Re: HSA How do I invest?

Post by annebert » Sun Nov 11, 2018 7:20 pm

Yes it is very much worth it to max out your HSA. And if you can afford to cover medical expenses out of pocket, don't let $1500 sit in your account uninvested! This is never-taxed money, it is golden.

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