Fee incurred during HSA reallocation?

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seeker24
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Joined: Sun Jul 14, 2019 5:54 pm

Fee incurred during HSA reallocation?

Post by seeker24 »

Hi all,

I have an HSA account with Fidelity and the cash is invested in mutual funds. I would like to change that and switch the investment to ETFs instead. If I want to do that, looks like I need to sell the mutual funds at 100% dollar value and trade for an ETF of choice.

If I do that, will I incur any fees or cap gain charges if there was growth in the account on mutual funds until now? Or is it that within HSA, fees don't apply?

Thanks!
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David Jay
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Re: Fee incurred during HSA reallocation?

Post by David Jay »

I have a Fidelity HSA. No fees or federal tax inside the HSA.
Last edited by David Jay on Tue Jun 08, 2021 6:40 pm, edited 1 time in total.
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tomsense76
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Re: Fee incurred during HSA reallocation?

Post by tomsense76 »

It likely depends on which mutual funds. Some mutual funds do have fees for this kind of thing

Taxes will depend on what state you are in (there are no Federal taxes). IIRC CA and NJ are the ones that tax capital gains in HSAs

FWIW I transferred a Roth to Fidelity last year that held a Vanguard Target Date mutual fund and sold it without fees
"Anyone who claims to understand quantum theory is either lying or crazy" -- Richard Feynman
nalor511
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Re: Fee incurred during HSA reallocation?

Post by nalor511 »

tomsense76 wrote: Tue Jun 08, 2021 3:58 pm It likely depends on which mutual funds. Some mutual funds do have fees for this kind of thing

Taxes will depend on what state you are in (there are no Federal taxes). IIRC CA and NJ are the ones that tax capital gains in HSAs

FWIW I transferred a Roth to Fidelity last year that held a Vanguard Target Date mutual fund and sold it without fees
You will owe cap gain taxes in CA for sure
Topic Author
seeker24
Posts: 23
Joined: Sun Jul 14, 2019 5:54 pm

Re: Fee incurred during HSA reallocation?

Post by seeker24 »

tomsense76 wrote: Tue Jun 08, 2021 3:58 pm It likely depends on which mutual funds. Some mutual funds do have fees for this kind of thing

Taxes will depend on what state you are in (there are no Federal taxes). IIRC CA and NJ are the ones that tax capital gains in HSAs

FWIW I transferred a Roth to Fidelity last year that held a Vanguard Target Date mutual fund and sold it without fees
Thanks. I have couple of Fidelity mutual funds including S&P 500 inside HSA. I wanted to change it to an ETF to minimize cap gains, as I will be moving to CA later this year. I am currently in OH.

So yes! CA will tax me big time if I don't switch. My plan to just keep ETFs instead of MFs for the same reason.

Is there any advantage to reallocate investments now vs wait and switch just before moving to CA later? TIA!
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Duckie
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Re: Fee incurred during HSA reallocation?

Post by Duckie »

seeker24 wrote: Tue Jun 08, 2021 5:53 pm I have couple of Fidelity mutual funds including S&P 500 inside HSA. I wanted to change it to an ETF to minimize cap gains, as I will be moving to CA later this year. I am currently in OH.

So yes! CA will tax me big time if I don't switch. My plan to just keep ETFs instead of MFs for the same reason.

Is there any advantage to reallocate investments now vs wait and switch just before moving to CA later?
I'd reallocate sooner rather than later. Consider using just (FUAMX) Fidelity Intermediate Treasury Bond Index Fund (0.03%) in the HSA. You don't pay state income taxes on the earnings because they're treasuries and you don't pay federal income taxes because they're in an HSA.
Topic Author
seeker24
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Joined: Sun Jul 14, 2019 5:54 pm

Re: Fee incurred during HSA reallocation?

Post by seeker24 »

Duckie wrote: Tue Jun 08, 2021 6:06 pm I'd reallocate sooner rather than later. Consider using just (FUAMX) Fidelity Intermediate Treasury Bond Index Fund (0.03%) in the HSA. You don't pay state income taxes on the earnings because they're treasuries and you don't pay federal income taxes because they're in an HSA.
Thanks! I thought about getting treasuries. But since I don't have a strong international stocks in my portfolio, I am considering VI Vanguard Total World Stock ETF (VT). I may do a bit of both treasuries and VT.

Thoughts on that? Thank you.
nalor511
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Re: Fee incurred during HSA reallocation?

Post by nalor511 »

seeker24 wrote: Tue Jun 08, 2021 6:21 pm
Duckie wrote: Tue Jun 08, 2021 6:06 pm I'd reallocate sooner rather than later. Consider using just (FUAMX) Fidelity Intermediate Treasury Bond Index Fund (0.03%) in the HSA. You don't pay state income taxes on the earnings because they're treasuries and you don't pay federal income taxes because they're in an HSA.
Thanks! I thought about getting treasuries. But since I don't have a strong international stocks in my portfolio, I am considering VI Vanguard Total World Stock ETF (VT). I may do a bit of both treasuries and VT.

Thoughts on that? Thank you.
Fuamx has cap gains distos which CA taxes
tomsense76
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Re: Fee incurred during HSA reallocation?

Post by tomsense76 »

nalor511 wrote: Wed Jun 09, 2021 1:51 am
seeker24 wrote: Tue Jun 08, 2021 6:21 pm
Duckie wrote: Tue Jun 08, 2021 6:06 pm I'd reallocate sooner rather than later. Consider using just (FUAMX) Fidelity Intermediate Treasury Bond Index Fund (0.03%) in the HSA. You don't pay state income taxes on the earnings because they're treasuries and you don't pay federal income taxes because they're in an HSA.
Thanks! I thought about getting treasuries. But since I don't have a strong international stocks in my portfolio, I am considering VI Vanguard Total World Stock ETF (VT). I may do a bit of both treasuries and VT.

Thoughts on that? Thank you.
Fuamx has cap gains distos which CA taxes
This is what I do (hold VT). Though there are always a few cents lingering around so I put those in Fidelity Zero funds at roughly global cap weight. Also I don't live in CA

As nalor511 notes, this will be taxed in CA. If you want to avoid taxes, treasuries are your best bet. Though it's important to know what your overall plan is. Accepting the taxes may be ok. Alternatively you could just hold more stocks elsewhere like your 401k and just move some bonds to your HSA
"Anyone who claims to understand quantum theory is either lying or crazy" -- Richard Feynman
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