Merging HSA accounts or keeping separate?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
addicoe
Posts: 50
Joined: Sun Jul 28, 2019 6:15 pm

Merging HSA accounts or keeping separate?

Post by addicoe »

Long story short my employer changed HSA accounts so I then had two separate ones. I left the money at the time separate instead of merging into the new HSA account since the fees were lower. However the custodian is changing so I now have the ability to move the funds to a new one for free. I could move to any of my choosing. Is there any benefit to merge to have one account or keep separate? If I keep separate I could save maybe $25-$50 a year in fees but merging them means one less account to manage.
User avatar
FiveK
Posts: 15863
Joined: Sun Mar 16, 2014 2:43 pm

Re: Merging HSA accounts or keeping separate?

Post by FiveK »

Have you considered moving all to a Fidelity HSA?
Mike Scott
Posts: 3594
Joined: Fri Jul 19, 2013 2:45 pm

Re: Merging HSA accounts or keeping separate?

Post by Mike Scott »

Yes, open your own HSA at Fidelity and consolidate everything into it. Then transfer your employer HSA money to it at least once per year. If your employer account is not maxed out, you can put the difference directly into the Fidelity HSA.
Topic Author
addicoe
Posts: 50
Joined: Sun Jul 28, 2019 6:15 pm

Re: Merging HSA accounts or keeping separate?

Post by addicoe »

Mike Scott wrote: Sun Aug 29, 2021 7:53 pm Yes, open your own HSA at Fidelity and consolidate everything into it. Then transfer your employer HSA money to it at least once per year. If your employer account is not maxed out, you can put the difference directly into the Fidelity HSA.
Wait are you saying I can not contribute to my employer HSA and instead contribute to a separate Fidelity HSA? That would be nice. I get $600 per year from my employer so that would go into their HSA, the rest I could contribute myself to a Fidelity HSA? Can it be lump sum or per paycheck? I assume it would be outside of payroll.
Topic Author
addicoe
Posts: 50
Joined: Sun Jul 28, 2019 6:15 pm

Re: Merging HSA accounts or keeping separate?

Post by addicoe »

FiveK wrote: Sun Aug 29, 2021 7:47 pm Have you considered moving all to a Fidelity HSA?
I have considered moving to Fidelity HSA however I don't think I can move all to it. I get $600 per year from my employer.
RetiredAL
Posts: 3571
Joined: Tue Jun 06, 2017 12:09 am
Location: SF Bay Area

Re: Merging HSA accounts or keeping separate?

Post by RetiredAL »

addicoe wrote: Sun Aug 29, 2021 8:06 pm
Mike Scott wrote: Sun Aug 29, 2021 7:53 pm Yes, open your own HSA at Fidelity and consolidate everything into it. Then transfer your employer HSA money to it at least once per year. If your employer account is not maxed out, you can put the difference directly into the Fidelity HSA.
Wait are you saying I can not contribute to my employer HSA and instead contribute to a separate Fidelity HSA? That would be nice. I get $600 per year from my employer so that would go into their HSA, the rest I could contribute myself to a Fidelity HSA? Can it be lump sum or per paycheck? I assume it would be outside of payroll.
Before I retired, my Company's HSA was with Fidelity. In addition to the company funding, I could payroll contribute more, or I could personally contribute more to the HSA, up to the yearly limits.
Mike Scott
Posts: 3594
Joined: Fri Jul 19, 2013 2:45 pm

Re: Merging HSA accounts or keeping separate?

Post by Mike Scott »

If you are contributing directly to your own HSA, it can be however you want. The maximum is still the annual individual or family maximum minus your employer's contribution. You do want to think about whether you want to go through payroll for the FICA deduction if you are below the FICA salary cap.
User avatar
Duckie
Posts: 9797
Joined: Thu Mar 08, 2007 1:55 pm

Re: Merging HSA accounts or keeping separate?

Post by Duckie »

addicoe wrote: Sun Aug 29, 2021 8:06 pm Wait are you saying I can not contribute to my employer HSA and instead contribute to a separate Fidelity HSA?
You can but you probably should not. Open a non-employer HSA at Fidelity and transfer the entire old employer HSA assets to the Fidelity HSA. Then at least once a year transfer the current employer HSA assets to the Fidelity HSA. That way you still contribute to your employer HSA through payroll which saves you FICA taxes.
User avatar
anon_investor
Posts: 15147
Joined: Mon Jun 03, 2019 1:43 pm

Re: Merging HSA accounts or keeping separate?

Post by anon_investor »

RetiredAL wrote: Sun Aug 29, 2021 8:14 pm
addicoe wrote: Sun Aug 29, 2021 8:06 pm
Mike Scott wrote: Sun Aug 29, 2021 7:53 pm Yes, open your own HSA at Fidelity and consolidate everything into it. Then transfer your employer HSA money to it at least once per year. If your employer account is not maxed out, you can put the difference directly into the Fidelity HSA.
Wait are you saying I can not contribute to my employer HSA and instead contribute to a separate Fidelity HSA? That would be nice. I get $600 per year from my employer so that would go into their HSA, the rest I could contribute myself to a Fidelity HSA? Can it be lump sum or per paycheck? I assume it would be outside of payroll.
Before I retired, my Company's HSA was with Fidelity. In addition to the company funding, I could payroll contribute more, or I could personally contribute more to the HSA, up to the yearly limits.
What did you do with your employer HSA when you retired? Did you have to transfer it to a personal HSA at Fidelity?
PersonalFinanceJam
Posts: 720
Joined: Tue Aug 24, 2021 8:32 am

Re: Merging HSA accounts or keeping separate?

Post by PersonalFinanceJam »

Duckie wrote: Sun Aug 29, 2021 8:20 pm
addicoe wrote: Sun Aug 29, 2021 8:06 pm Wait are you saying I can not contribute to my employer HSA and instead contribute to a separate Fidelity HSA?
You can but you probably should not. Open a non-employer HSA at Fidelity and transfer the entire old employer HSA assets to the Fidelity HSA. Then at least once a year transfer the current employer HSA assets to the Fidelity HSA. That way you still contribute to your employer HSA through payroll which saves you FICA taxes.
This is what I do. My employer currently deposits their incentive HSA money in late January or early February into the company HSA plan, and I contribute my remaining amount throughout the year from payroll deduction. About once a quarter I log into Fidelity and go to their transfer center and do a partial account transfer, whatever the account balance is minus the 50 dollars needed to keep the employer hsa open and in good standing. In about two to three weeks the money shows up at fidelity and I invest it in the mutual fund I keep in the account. There are no fees for direct custodial to custodial transfers in my plan. You need to be sure to check with your plan on fees. Much like employers negotiate what record keeping fees get passed on to an employee in a 401k, an employer can choose to cover fees in an HSA or not. If you were to go to the general website of the company hosting my employers HSA and look at the fee schedule, you would think there was a transfer fee. Not so with the account set up by my employer.

One note I like to bring up to people when talking about the Fidelity HSA, the advice you will see here most of the time is to use a stock index fund when investing in you HSA. Perfectly reasonable advice. I prefer to use a balanced fund instead so I use one of Fidelity’s target date index funds. If you go the route of the Fidelity target fund, know there is a little quirk at Fidelity and you can invest in the institutional version of the fund. This saves you .04% on the expense ratio, .12% for the investor share vs .08% for the institutional.
hnd
Posts: 1086
Joined: Mon Jun 22, 2020 11:43 am

Re: Merging HSA accounts or keeping separate?

Post by hnd »

PersonalFinanceJam wrote: Mon Aug 30, 2021 8:15 am
One note I like to bring up to people when talking about the Fidelity HSA, the advice you will see here most of the time is to use a stock index fund when investing in you HSA. Perfectly reasonable advice. I prefer to use a balanced fund instead so I use one of Fidelity’s target date index funds. If you go the route of the Fidelity target fund, know there is a little quirk at Fidelity and you can invest in the institutional version of the fund. This saves you .04% on the expense ratio, .12% for the investor share vs .08% for the institutional.
i use the ishares asset allocation series etfs. currently in AOA
User avatar
grabiner
Advisory Board
Posts: 35439
Joined: Tue Feb 20, 2007 10:58 pm
Location: Columbia, MD

Re: Merging HSA accounts or keeping separate?

Post by grabiner »

Do you live in CA or NJ? If so, closing an HSA with investments in it might lead to a state-taxable capital gain, which is a good reason for keeping both accounts unless you have capital losses to offset those capital gains. (In NJ, capital losses don't carry over, so in any year in which you do have capital losses, it is worth harvesting an equal amount of capital gains in your HSA even if you don't intend to transfer the assets.)

But a small state tax bill might be worth the cost if merging accounts saves you money, either in account fees or fund expenses. Consolidating at Fidelity gives you access to all of Fidelity's low-cost investments.
Wiki David Grabiner
taaray
Posts: 37
Joined: Mon Oct 25, 2021 12:03 am

Re: Merging HSA accounts or keeping separate?

Post by taaray »

PersonalFinanceJam wrote: Mon Aug 30, 2021 8:15 am
Duckie wrote: Sun Aug 29, 2021 8:20 pm
addicoe wrote: Sun Aug 29, 2021 8:06 pm Wait are you saying I can not contribute to my employer HSA and instead contribute to a separate Fidelity HSA?
You can but you probably should not. Open a non-employer HSA at Fidelity and transfer the entire old employer HSA assets to the Fidelity HSA. Then at least once a year transfer the current employer HSA assets to the Fidelity HSA. That way you still contribute to your employer HSA through payroll which saves you FICA taxes.
This is what I do. My employer currently deposits their incentive HSA money in late January or early February into the company HSA plan, and I contribute my remaining amount throughout the year from payroll deduction. About once a quarter I log into Fidelity and go to their transfer center and do a partial account transfer, whatever the account balance is minus the 50 dollars needed to keep the employer hsa open and in good standing. In about two to three weeks the money shows up at fidelity and I invest it in the mutual fund I keep in the account. There are no fees for direct custodial to custodial transfers in my plan. You need to be sure to check with your plan on fees. Much like employers negotiate what record keeping fees get passed on to an employee in a 401k, an employer can choose to cover fees in an HSA or not. If you were to go to the general website of the company hosting my employers HSA and look at the fee schedule, you would think there was a transfer fee. Not so with the account set up by my employer.

One note I like to bring up to people when talking about the Fidelity HSA, the advice you will see here most of the time is to use a stock index fund when investing in you HSA. Perfectly reasonable advice. I prefer to use a balanced fund instead so I use one of Fidelity’s target date index funds. If you go the route of the Fidelity target fund, know there is a little quirk at Fidelity and you can invest in the institutional version of the fund. This saves you .04% on the expense ratio, .12% for the investor share vs .08% for the institutional.
Old thread but in a similar situation. Old HSA + new employer one via Fidelity. Is the advice saying to open a separate HSA also at Fidelity? Is that even possible and what would be the advantage?

I just activated the Fidelity one and plan to transfer in the old HSA.
User avatar
zincTwo
Posts: 722
Joined: Tue Oct 30, 2018 11:31 pm
Location: California

Re: Merging HSA accounts or keeping separate?

Post by zincTwo »

Mike Scott wrote: Sun Aug 29, 2021 7:53 pm Yes, open your own HSA at Fidelity and consolidate everything into it. Then transfer your employer HSA money to it at least once per year. If your employer account is not maxed out, you can put the difference directly into the Fidelity HSA.
I did this, then began nagging at different company forums for HR to migrate HSA to fidelity... after 2 years, they moved to Fidelity. :D
Post Reply