HSA Strategy Questions

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Topic Author
jeremyl
Posts: 209
Joined: Sat Dec 20, 2014 8:38 am
Location: Indiana

HSA Strategy Questions

Post by jeremyl » Tue May 05, 2020 8:07 pm

I just started an HSA with my employer in January and I’m about to surpass the required $2,500 amount that cannot be invested. So, all contributions from the next pay on can be invested. I have the Vanguard 500 index fund (VFIAX) as the best stock option And I have the Vanguard Total Bond Market Fund (VBTLX) for a bond fund.

My questions are; 1. Do I let the funds accumulate for the year in the default savings account and then open an HSA at the end of the year and transfer it to the fidelity hsa? I read here that I could roll my work hsa to my personal hsa one time a year. Going through employer’s vendor gives me an employer amount of $500/yr. Please correct me if I’m wrong on that?

2. Do I start investing every dollar above $2,500 amount in the vanguard 500 fund? Or do I keep a year’s worth of family deductible intone savings part then put future contributions in the 500 fund?

A little background on our situation: we max my 403b, both roths, and hsa. We have about a year’s worth of emergency funds and contribute extra cash to taxable (vtsax). I’m a teacher and will get a pension. I have 12 years left max until I retire. We do have a 2 year old daughter too.

Thanks

retired@50
Posts: 2649
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: HSA Strategy Questions

Post by retired@50 » Tue May 05, 2020 8:20 pm

I'd invest as soon as possible.
Check this out.
https://www.bogleheads.org/wiki/Health_savings_account

Regards,
This is one person's opinion. Nothing more.

gclancer
Posts: 688
Joined: Sat Apr 27, 2013 10:34 am

Re: HSA Strategy Questions

Post by gclancer » Tue May 05, 2020 8:23 pm

jeremyl wrote:
Tue May 05, 2020 8:07 pm
2. Do I start investing every dollar above $2,500 amount in the vanguard 500 fund? Or do I keep a year’s worth of family deductible intone savings part then put future contributions in the 500 fund?

A little background on our situation: we max my 403b, both roths, and hsa. We have about a year’s worth of emergency funds and contribute extra cash to taxable (vtsax). I’m a teacher and will get a pension. I have 12 years left max until I retire. We do have a 2 year old daughter too.
Given the above, yes you should invest everything in the Vanguard 500 fund. No need to transfer to Fidelity. Adjust your asset allocation in other investment accounts you have to balance your asset allocation. Also be sure to keep good records of your medical expenses for tax free reimbursement at a later date (with your pension and large 403(b)s access to tax free monies will be particularly helpful).

tenkuky
Posts: 1074
Joined: Sun Dec 14, 2014 4:28 pm

Re: HSA Strategy Questions

Post by tenkuky » Tue May 05, 2020 8:24 pm

It is not true that you can only rollover once in 12 months. That is if you do an "indirect rollover", aka have the HSA distributed to you and then promptly send the amount to the receiving HSA.
Direct trustee-to-trustee transfers can happen more often, but check for pesky fees with your employer HSA.
You can have both: the employer vendor and your own. How soon in the year does the employer pitch in the $500? I would immediately transfer the entire amount (save a few bucks) to your HSA where you have more options and no "minimum to invest". That is a cash drag you don't need.
My employer front-loads so I transfer out as soon as I front load the entire year as well.
If it's trickled in over the year, it gets more annoying.
I agree with retired@50; don't hold in savings, invest the lot.

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anon_investor
Posts: 1906
Joined: Mon Jun 03, 2019 1:43 pm

Re: HSA Strategy Questions

Post by anon_investor » Tue May 05, 2020 8:34 pm

Op what fees does your employer HSA charge to invest (if any). Some crappy HSAs charge a monthly fee or even an assets under management fee. Is there a fee ny the plan to transfer out HSA funds to another HSA? If there are fees that may change the recommendation.

Topic Author
jeremyl
Posts: 209
Joined: Sat Dec 20, 2014 8:38 am
Location: Indiana

Re: HSA Strategy Questions

Post by jeremyl » Wed May 06, 2020 5:26 am

tenkuky wrote:
Tue May 05, 2020 8:24 pm
It is not true that you can only rollover once in 12 months. That is if you do an "indirect rollover", aka have the HSA distributed to you and then promptly send the amount to the receiving HSA.
Direct trustee-to-trustee transfers can happen more often, but check for pesky fees with your employer HSA.
You can have both: the employer vendor and your own. How soon in the year does the employer pitch in the $500? I would immediately transfer the entire amount (save a few bucks) to your HSA where you have more options and no "minimum to invest". That is a cash drag you don't need.
My employer front-loads so I transfer out as soon as I front load the entire year as well.
If it's trickled in over the year, it gets more annoying.
I agree with retired@50; don't hold in savings, invest the lot.
I will have to check into the trustee-to-trustee transfer and see if there are fees on that. My employer contributed their portion in February. Employer pays any fees to run the HSA. I was surprised to learn this considering the way our 403b was until I pushed for a better plan.

My original thought was to transfer at the end of the year since I do direct deposit. I could front load after the employer contribution and transfer but then I’d have to stop the payroll so I don’t over contribute.

Thank you for the feedback. I’ll let you know what I find out.

aristotelian
Posts: 7428
Joined: Wed Jan 11, 2017 8:05 pm

Re: HSA Strategy Questions

Post by aristotelian » Wed May 06, 2020 7:02 am

Transfer (or withdraw and roll over) all the cash and invest at Fidelity. You can direct deposit to Fidelity HSA if you want.

tenkuky
Posts: 1074
Joined: Sun Dec 14, 2014 4:28 pm

Re: HSA Strategy Questions

Post by tenkuky » Wed May 06, 2020 7:41 pm

jeremyl wrote:
Wed May 06, 2020 5:26 am
tenkuky wrote:
Tue May 05, 2020 8:24 pm
It is not true that you can only rollover once in 12 months. That is if you do an "indirect rollover", aka have the HSA distributed to you and then promptly send the amount to the receiving HSA.
Direct trustee-to-trustee transfers can happen more often, but check for pesky fees with your employer HSA.
You can have both: the employer vendor and your own. How soon in the year does the employer pitch in the $500? I would immediately transfer the entire amount (save a few bucks) to your HSA where you have more options and no "minimum to invest". That is a cash drag you don't need.
My employer front-loads so I transfer out as soon as I front load the entire year as well.
If it's trickled in over the year, it gets more annoying.
I agree with retired@50; don't hold in savings, invest the lot.
I will have to check into the trustee-to-trustee transfer and see if there are fees on that. My employer contributed their portion in February. Employer pays any fees to run the HSA. I was surprised to learn this considering the way our 403b was until I pushed for a better plan.

My original thought was to transfer at the end of the year since I do direct deposit. I could front load after the employer contribution and transfer but then I’d have to stop the payroll so I don’t over contribute.

Thank you for the feedback. I’ll let you know what I find out.
Yes, do report back. I actually rapidly front load, watch the total, then login to the payroll request and stop it. Try to do it in under 3 months and then transfer out. The fees aren't the drag, it's the "minimum cash to invest" that stings. Since guaranteed they are paying 0% on that money of yours.

invest4
Posts: 137
Joined: Wed Apr 24, 2019 2:19 am

Re: HSA Strategy Questions

Post by invest4 » Thu May 07, 2020 1:36 am

jeremyl wrote:
Tue May 05, 2020 8:07 pm
I just started an HSA with my employer in January and I’m about to surpass the required $2,500 amount that cannot be invested. So, all contributions from the next pay on can be invested. I have the Vanguard 500 index fund (VFIAX) as the best stock option And I have the Vanguard Total Bond Market Fund (VBTLX) for a bond fund.

My questions are; 1. Do I let the funds accumulate for the year in the default savings account and then open an HSA at the end of the year and transfer it to the fidelity hsa? I read here that I could roll my work hsa to my personal hsa one time a year. Going through employer’s vendor gives me an employer amount of $500/yr. Please correct me if I’m wrong on that?

2. Do I start investing every dollar above $2,500 amount in the vanguard 500 fund? Or do I keep a year’s worth of family deductible intone savings part then put future contributions in the 500 fund?

A little background on our situation: we max my 403b, both roths, and hsa. We have about a year’s worth of emergency funds and contribute extra cash to taxable (vtsax). I’m a teacher and will get a pension. I have 12 years left max until I retire. We do have a 2 year old daughter too.

Thanks

Some initial comments:

[*]Look before you leap. If you don't fully understand your existing plan and their requirements, you can make a mistake. For example, making a transfer error which results in the closure of the employer HSA. Of course, most issues can be fixed, but always nice to avoid headaches.

[*]$2500 which can not be invested. I will simply take it on its face that this is just how it is. My employer HSA (Payflex) only requires that I keep a nominal amount in the account so that it stays open. Otherwise, I can sweep it all out to the HSA I established with Fidelity.

[*]What fees are charged by your employer HSA to invest? This can potentially be atrocious...as can be investment options. I don't find Payflex options and costs to be appealing at all...thus why I created an account at Fidelity.

[*]Are there fees associated with any transfers? Payflex charges me $25 every time I make one. As a result, I typically only make 2-3 each year.

[*]How do you intend to use your HSA? Is your plan to use it for longer term expenses in retirement only ("medical 401k"), use it for current medical expenses or both? Due to its triple tax advantage, many advocate that you pay current medical expenses out of pocket and contribute and invest the rest to grow and use in retirement while also keeping your current receipts in case you wish to be reimbursed for those expenses many years down the road.

[*]Given the significant tax advantages. If you are going to invest, I recommend you utilize the space for equities only.

Hope some of the above proves helpful.

Best wishes.

Topic Author
jeremyl
Posts: 209
Joined: Sat Dec 20, 2014 8:38 am
Location: Indiana

Re: HSA Strategy Questions

Post by jeremyl » Fri May 08, 2020 1:11 pm

invest4 wrote:
Thu May 07, 2020 1:36 am
jeremyl wrote:
Tue May 05, 2020 8:07 pm
I just started an HSA with my employer in January and I’m about to surpass the required $2,500 amount that cannot be invested. So, all contributions from the next pay on can be invested. I have the Vanguard 500 index fund (VFIAX) as the best stock option And I have the Vanguard Total Bond Market Fund (VBTLX) for a bond fund.

My questions are; 1. Do I let the funds accumulate for the year in the default savings account and then open an HSA at the end of the year and transfer it to the fidelity hsa? I read here that I could roll my work hsa to my personal hsa one time a year. Going through employer’s vendor gives me an employer amount of $500/yr. Please correct me if I’m wrong on that?

2. Do I start investing every dollar above $2,500 amount in the vanguard 500 fund? Or do I keep a year’s worth of family deductible intone savings part then put future contributions in the 500 fund?

A little background on our situation: we max my 403b, both roths, and hsa. We have about a year’s worth of emergency funds and contribute extra cash to taxable (vtsax). I’m a teacher and will get a pension. I have 12 years left max until I retire. We do have a 2 year old daughter too.

Thanks

Some initial comments:

[*]Look before you leap. If you don't fully understand your existing plan and their requirements, you can make a mistake. For example, making a transfer error which results in the closure of the employer HSA. Of course, most issues can be fixed, but always nice to avoid headaches.
I'll have to ask about this....nothing would surprise me.

[*]$2500 which can not be invested. I will simply take it on its face that this is just how it is. My employer HSA (Payflex) only requires that I keep a nominal amount in the account so that it stays open. Otherwise, I can sweep it all out to the HSA I established with Fidelity.
Yes, this is just how it is.

[*]What fees are charged by your employer HSA to invest? This can potentially be atrocious...as can be investment options. I don't find Payflex options and costs to be appealing at all...thus why I created an account at Fidelity.
No fees.

[*]Are there fees associated with any transfers? Payflex charges me $25 every time I make one. As a result, I typically only make 2-3 each year.

I was just told it was $25 to transfer.

[*]How do you intend to use your HSA? Is your plan to use it for longer term expenses in retirement only ("medical 401k"), use it for current medical expenses or both? Due to its triple tax advantage, many advocate that you pay current medical expenses out of pocket and contribute and invest the rest to grow and use in retirement while also keeping your current receipts in case you wish to be reimbursed for those expenses many years down the road.

I plan to use it as an investment account and pay out of pocket for medical expenses unless some big medical expense comes up that I really need to use it for.

[*]Given the significant tax advantages. If you are going to invest, I recommend you utilize the space for equities only.
That's the plan.

Hope some of the above proves helpful.

Best wishes.
I just found out that I cannot let the rest of my contributions (above the $2,500) auto-invest into the S&P 500 fund. So, I'll have to fill out the investment election form more frequently or I'd have to just wait and do it at the end of the year or beginning of the next year just so I can do it all at once. What a pain.

Once I find out whether or transferring all funds out of the account causes any problems with the employer, I feel I should get it maxed ASAP and then transfer it to Fidelity.

Thanks!

Topic Author
jeremyl
Posts: 209
Joined: Sat Dec 20, 2014 8:38 am
Location: Indiana

Re: HSA Strategy Questions

Post by jeremyl » Sat May 23, 2020 6:25 am

Just wanted to give an update.

I can max out the HSA early with the company contribution and transfer to a fidelity HSA which will allow me to invest the entire amount vs having to keep $2,500 in cash. As long as I don’t close the HSA account with the vendor (American Fidelity) it will not mess with my health insurance.

I will incur a $25 transfer fee.

Now, my only delay is that I’m waiting to see if I’ll get an interview for another company. They contribute $2,000 to the employee HSA. If I get the job then I will need to know how soon that gets funded.

Thanks for the help and guidance on questions to ask so I can maximize the benefit of the HSA.

terran
Posts: 1306
Joined: Sat Jan 10, 2015 10:50 pm

Re: HSA Strategy Questions

Post by terran » Sat May 23, 2020 8:14 am

jeremyl wrote:
Sat May 23, 2020 6:25 am
I will incur a $25 transfer fee.
If you want to avoid the fee you can do an indirect rollover instead of a trustee-to-trustee transfer. You can do this at most once per rolling 12 month period (not per calendar year). Here's how: https://thefinancebuff.com/how-to-rollo ... r-fee.html

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