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Is 0.30% Annual Fee on HSA Investment Account Reasonable?

Posted: Sun Aug 04, 2019 2:28 pm
by Megamill
I have about $20k in my HSA not invested (yet). My HSA investment provider charges an annual fee of 0.30% (in addition to any of the mutual fund expense ratios). Is this extra fee pretty standard or is it a ripoff?

Re: Is 0.30% Annual Fee on HSA Investment Account Reasonable?

Posted: Sun Aug 04, 2019 2:36 pm
by aristotelian
Pretty standard but still a rip-off. Fidelity HSA has no fees.

Re: Is 0.30% Annual Fee on HSA Investment Account Reasonable?

Posted: Sun Aug 04, 2019 2:40 pm
by Megamill
Is it enough of a ripoff to keep me from investing any of it? There are a few low cost Vanguard funds available (I was eyeing the 2030 target retirement fund @ 0.14% ER). Assuming I don't need the funds for another 5 to 10 years and plan to continually add to it each month...

Re: Is 0.30% Annual Fee on HSA Investment Account Reasonable?

Posted: Sun Aug 04, 2019 3:19 pm
by mrsbetsy
I use Lively and it invests in TDAmeritrade. You can get VTI for .03 .

Re: Is 0.30% Annual Fee on HSA Investment Account Reasonable?

Posted: Sun Aug 04, 2019 3:23 pm
by 3-20Characters
Megamill wrote: Sun Aug 04, 2019 2:40 pm Is it enough of a ripoff to keep me from investing any of it? There are a few low cost Vanguard funds available (I was eyeing the 2030 target retirement fund @ 0.14% ER). Assuming I don't need the funds for another 5 to 10 years and plan to continually add to it each month...
If I were stuck (couldn’t choose fidelity or other), I would invest it over that time period. The fund you suggest is a good choice.

Re: Is 0.30% Annual Fee on HSA Investment Account Reasonable?

Posted: Sun Aug 04, 2019 3:54 pm
by stevethefundguy
I have an HSA account at HSAbank that is funded by automatic payroll deductions plus a quarterly employer contribution. But HSAbank just announced a .30% fee on mutual fund assets up to $50,000, which I've surpassed, meaning they'll take $150 annually out of my account. I'm thinking of transferring most of the account to Fidelity, but that means maintaining two accounts -- HSAbank and Fido. Wondering if anyone has found it creates issues, with taxes or otherwise, having two HSA accounts?

Re: Is 0.30% Annual Fee on HSA Investment Account Reasonable?

Posted: Sun Aug 04, 2019 3:59 pm
by whodidntante
Yes, fees like that are typical, but you don't have to pay them. Fidelity offers first-dollar investing and no fees.

Re: Is 0.30% Annual Fee on HSA Investment Account Reasonable?

Posted: Sun Aug 04, 2019 4:00 pm
by whodidntante
stevethefundguy wrote: Sun Aug 04, 2019 3:54 pm I have an HSA account at HSAbank that is funded by automatic payroll deductions plus a quarterly employer contribution. But HSAbank just announced a .30% fee on mutual fund assets up to $50,000, which I've surpassed, meaning they'll take $150 annually out of my account. I'm thinking of transferring most of the account to Fidelity, but that means maintaining two accounts -- HSAbank and Fido. Wondering if anyone has found it creates issues, with taxes or otherwise, having two HSA accounts?
I have two HSA accounts and I do not have "issues." What issues are you concerned about?

Re: Is 0.30% Annual Fee on HSA Investment Account Reasonable?

Posted: Sun Aug 04, 2019 4:08 pm
by stevethefundguy
whodidntante wrote: Sun Aug 04, 2019 4:00 pm I have two HSA accounts and I do not have "issues." What issues are you concerned about?
Thanks. It means keeping track of two annual HSA tax forms for tax filing, I suppose.

Re: Is 0.30% Annual Fee on HSA Investment Account Reasonable?

Posted: Sun Aug 04, 2019 4:27 pm
by stocknoob4111
My HSA charges $2.50 per month regardless of balance, I have only $5k in it so far since I started contributing the max ($3480/yr) only starting last year. That comes out to a 0.6% annual fee which is a rip off but I feel it will get a bit better as my balance grows. I figure the tax savings on my contributions offset the fee somewhat although California does not allow HSA tax deductions.

Re: Is 0.30% Annual Fee on HSA Investment Account Reasonable?

Posted: Sun Aug 04, 2019 10:12 pm
by Soon2BXProgrammer
Megamill wrote: Sun Aug 04, 2019 2:28 pm I have about $20k in my HSA not invested (yet). My HSA investment provider charges an annual fee of 0.30% (in addition to any of the mutual fund expense ratios). Is this extra fee pretty standard or is it a ripoff?
Switch to either Fidelity or Lively, both are basically fee free.

Re: Is 0.30% Annual Fee on HSA Investment Account Reasonable?

Posted: Sun Aug 04, 2019 10:40 pm
by miamivice
The thing with HSAs is that your balance will be relatively low. We have $12k in ours, so we have to pay maybe $50 a year (.4%) in fees. $50 a year in fees is not bad. If someday our balance grows to $120,000 then we will be paying $500 a year in fees and that will hurt a lot more.

However, the triple tax advantage of HSAs outweighs the negative in fees, so I would not hesitate to use a HSA Investment account with a .3% fee versus not investing the money at all.

Re: Is 0.30% Annual Fee on HSA Investment Account Reasonable?

Posted: Mon Aug 05, 2019 7:04 am
by jhfenton
Soon2BXProgrammer wrote: Sun Aug 04, 2019 10:12 pm
Megamill wrote: Sun Aug 04, 2019 2:28 pm I have about $20k in my HSA not invested (yet). My HSA investment provider charges an annual fee of 0.30% (in addition to any of the mutual fund expense ratios). Is this extra fee pretty standard or is it a ripoff?
Switch to either Fidelity or Lively, both are basically fee free.
+1 An HSA is not like a 401(k). The money is portable. There's no reason to pay 0.30% on invested HSA funds.

My employer-sponsored HSA provider has a 0.20% annual investment fee, and I make periodic transfers to Fidelity. (I'm fortunate that my employer HSA provider does not charge for trustee-to-trustee transfers.)

Worst-case scenario you accumulate cash each year and annually transfer it to Fidelity or Lively to invest. (I was with Lively paying a flat $2.50/month for more than a year before Fidelity came to market with a completely fee-free HSA. Lively matched them, but I had already moved to Fidelity at that point.)

Re: Is 0.30% Annual Fee on HSA Investment Account Reasonable?

Posted: Mon Aug 05, 2019 3:25 pm
by Megamill
Ok, this is getting interesting...So are these the steps I would follow to leverage Fidelity's preferable management of HSA:

1. Ask my employer's HSA provider if I can make transfers out of it to another HSA and find out if there are fees to do this

2. If yes, then open an HSA at Fidelity

3. Do the necessary set-up of my employer's HSA to "link" to the Fidelity HSA

4. Transfer x$ to Fidelity HSA (does Fidelity charge a trade fee to purchase Vanguard funds in HSAs?)

5. At income tax filing time, get both statements from employer's HSA & Fidelity for annual reporting

Anything else?

Re: Is 0.30% Annual Fee on HSA Investment Account Reasonable?

Posted: Mon Aug 05, 2019 3:31 pm
by mervinj7
Megamill wrote: Sun Aug 04, 2019 2:28 pm I have about $20k in my HSA not invested (yet). My HSA investment provider charges an annual fee of 0.30% (in addition to any of the mutual fund expense ratios). Is this extra fee pretty standard or is it a ripoff?
$20k*0.3%= $60/year. It's a rip-off but not the end of the world. I would transfer to a Fidelity HSA once a year.
Megamill wrote: Mon Aug 05, 2019 3:25 pm 4. Transfer x$ to Fidelity HSA (does Fidelity charge a trade fee to purchase Vanguard funds in HSAs?)
Anything else?
Don't buy Vanguard funds in a Fidelity HSAs. Why pay additional fees if you don't need to? Check out the wiki to see a list of equivalent funds.
https://www.bogleheads.org/wiki/Fidelity

Re: Is 0.30% Annual Fee on HSA Investment Account Reasonable?

Posted: Mon Aug 05, 2019 6:13 pm
by cas
Megamill wrote: Mon Aug 05, 2019 3:25 pm
3. Do the necessary set-up of my employer's HSA to "link" to the Fidelity HSA

4. Transfer x$ to Fidelity HSA
If, by "link"+ "transfer" you mean that you are trying to set up a method to electronically move the funds from one HSA to another, this method is fraught with IRS peril. Reports are that Fidelity likely wouldn't ever get enough information to be able to report the transaction properly to the IRS, which could lead to IRS misery for you. See (for example): "How do I indicate an HSA rollover contribution on Fidelity's website UI? (screenshot included)" viewtopic.php?t=269955

The safest way (as far as the IRS) to get the funds to Fidelity is to do a "trustee-to-trustee transfer". There is a form you need to fill in on Fidelity's website. Enter "rumor Fidelity HSA" (or, alternatively "HSA Fidelity <fill in your HSA name>" to see if there are been discussion transferring from your exact current HSA) in the search box at the top of this page and transfer details can be found in a massive thread where lots and lots of people have opened a Fidelity HSA and transfered HSA assets to it. A fee may be involved in a trustee-to-trustee transfer (on the part of the outgoing HSA.)

There is also a "60 day rollover" method, which is less likely to incur fees, but allows you to easily shoot yourself in the foot as far as the IRS. Worst case "shooting yourself in the foot" is really bad: all the funds you transferred would be deemed a nonqualified distribution from your HSA, you would owe penalties, taxes, and the funds would be disallowed from being in the HSA. So unless you are willing to study up on all the ins-and-outs and tax-reporting of a "60 day rollover" ahead of doing it, I don't recommend it. For example, see "reasons to avoid indirect HSA rollover?" viewtopic.php?t=266089

Re: Is 0.30% Annual Fee on HSA Investment Account Reasonable?

Posted: Tue Aug 06, 2019 7:25 am
by Megamill
Thanks all for the very helpful info. Lots of food for thought...