Optum HSA Fee Increase Notice

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ColoradoRob
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Optum HSA Fee Increase Notice

Post by ColoradoRob »

This is just a notice to any OPTUM HSA users out there that, as of April 2018, OPTUM is raising their fees by $1 per month on users who do not park at least $5,000 in the cash-side of the HSA. Any funds invested on the investment side of the HSA do not count toward that $5k average balance. $5k sitting idle in cash to avoid another $12 per year. Going from $3.00 per month to $4.00 per month may not seem like much, but that is like a 33% increase, right? Optum mailed the notice one day before implementing the new fee (sneaky optum!). Because HSAs are such a long-term vehicle, I'm now beginning to worry about the long term viability of staying with Optum since they just managed to make their HSA much less attractive.
tenkuky
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Re: Optum HSA Fee Increase Notice

Post by tenkuky »

What would it cost you (transfer fee) etc to move the money to Lively?
Is the employer putting in an amount?
Those are my decision points as I ponder moving out from HealthEquity, though their min cash (so far) is $2K.
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whodidntante
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Re: Optum HSA Fee Increase Notice

Post by whodidntante »

I have Optum. Fortunately my employer pays the fees, at least for now.
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mmmodem
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Re: Optum HSA Fee Increase Notice

Post by mmmodem »

I just checked my account and the fee is for an average balance of $500 :oops: (not $5000 ) You scared me there for a moment. :beer Curiously, my previous employer still pays that fee for me.
TylerS7
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Re: Optum HSA Fee Increase Notice

Post by TylerS7 »

This thread made me log in to my optum account and I found out two things:

1. My fees are $2.75 per month if savings account balance is less than $3000
2. They take the monthly 0.03% investment fee out of my savings account, which has been slightly more than the 0.01% interest the savings account earned. I left exactly $3000 in the account, so I’ve been paying $2.75 for the past few months

So I guess I need to actually keep more than $3000 in savings account to cover investment fees minus interest.
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jhfenton
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Re: Optum HSA Fee Increase Notice

Post by jhfenton »

TylerS7 wrote: Wed May 02, 2018 7:04 am This thread made me log in to my optum account and I found out two things:

1. My fees are $2.75 per month if savings account balance is less than $3000
2. They take the monthly 0.03% investment fee out of my savings account, which has been slightly more than the 0.01% interest the savings account earned. I left exactly $3000 in the account, so I’ve been paying $2.75 for the past few months

So I guess I need to actually keep more than $3000 in savings account to cover investment fees minus interest.
Those fees are way too high. To invest $50,000 would cost you cost $17.75/month ($213/year), plus you'd have to keep a few dollars in cash to pay the fees from inside the HSA. I thought my employer-sponsored HSA was bad at $2/month + 5 bp per quarter ($124/year for $50,000).

There are several cheaper alternatives in the market.

I pay Lively $2.50/month ($30/year) from a linked checking account. I keep no cash at all in my Lively account.
new2bogle
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Re: Optum HSA Fee Increase Notice

Post by new2bogle »

Here are the Optum fees for my employer sponsored HSA:

Monthly Maintenance Fee
$3.00 – Waived if average balance is $3,000 or more*
Includes use of:
Health Savings Account Debit MasterCard – to pay charges directly
Online Bill Payment and Mobile Access
Receipt Vault – allows you to upload and store images of receipts online
ATM and Outbound Transfer Fee
$2.50 per ATM transaction. In addition to our fee, the bank/ATM you use to withdraw funds may
charge you their own fee.
$20.00 per Outbound Transfer or Rollover to another HSA Custodian.
* THE AVERAGE BALANCE TO WAIVE THE MONTHLY MAINTENANCE FEE DOES NOT INCLUDE
INVESTMENT FUNDS
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mmmodem
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Re: Optum HSA Fee Increase Notice

Post by mmmodem »

Interesting how we have 4 different fee structures so far. Mine is $1 with a $500 average balance and $3 for investments.
TylerS7
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Re: Optum HSA Fee Increase Notice

Post by TylerS7 »

jhfenton wrote: Wed May 02, 2018 9:04 am
TylerS7 wrote: Wed May 02, 2018 7:04 am This thread made me log in to my optum account and I found out two things:

1. My fees are $2.75 per month if savings account balance is less than $3000
2. They take the monthly 0.03% investment fee out of my savings account, which has been slightly more than the 0.01% interest the savings account earned. I left exactly $3000 in the account, so I’ve been paying $2.75 for the past few months

So I guess I need to actually keep more than $3000 in savings account to cover investment fees minus interest.
Those fees are way too high. To invest $50,000 would cost you cost $17.75/month ($213/year), plus you'd have to keep a few dollars in cash to pay the fees from inside the HSA. I thought my employer-sponsored HSA was bad at $2/month + 5 bp per quarter ($124/year for $50,000).

There are several cheaper alternatives in the market.

I pay Lively $2.50/month ($30/year) from a linked checking account. I keep no cash at all in my Lively account.
I agree those fees are way too high for a $50k investment account, but for investment accounts less than $8333 Optum is the cheaper option. Lively wasn't talked about on this board until the month after I had JUST switched everything over to Optum. Since Optum is still a couple bucks cheaper right now it wasn't really worth it for me to go through the transfer process again. I was going to wait until my 2019 contribution and the math made sense.
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jhfenton
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Re: Optum HSA Fee Increase Notice

Post by jhfenton »

TylerS7 wrote: Wed May 02, 2018 1:17 pm I agree those fees are way too high for a $50k investment account, but for investment accounts less than $8333 Optum is the cheaper option. Lively wasn't talked about on this board until the month after I had JUST switched everything over to Optum. Since Optum is still a couple bucks cheaper right now it wasn't really worth it for me to go through the transfer process again. I was going to wait until my 2019 contribution and the math made sense.
If you have to keep $3,000 in cash earning next to nothing, I would consider that a substantial expense equal to 2.5%-3% per year, depending on what bond fund you compare it to. That's at least $75 per year in lost dividends. Compared to that, I would consider the $2.75 cheaper. That's only 1.1% per year.
michaeljc70
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Re: Optum HSA Fee Increase Notice

Post by michaeljc70 »

I have a personal (not employer) HSA with Optum. It was moved over when they bought Wells Fargo's HSA business. I haven't received any notice of an increase. I keep $1k in the cash part and have over $75k in the investment part.

For fees, it says:

Monthly Maintenance Fee $4.25 – Waived if average balance is $5,000 or more*

* THE AVERAGE BALANCE TO WAIVE THE MONTHLY MAINTENANCE FEE DOES NOT INCLUDE INVESTMENT FUNDS.

It seems I should be charged according to this, but I haven't been.
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ColoradoRob
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Re: Optum HSA Fee Increase Notice

Post by ColoradoRob »

mmmodem wrote: Wed May 02, 2018 6:17 am I just checked my account and the fee is for an average balance of $500 :oops: (not $5000 ) You scared me there for a moment. :beer Curiously, my previous employer still pays that fee for me.
I re-checked the Optum notice and sure enough it is $5000 (and sadly not $500) for me. I guess this shows that Optum charges everyone a little bit differently. Interesting business model...
TylerS7
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Re: Optum HSA Fee Increase Notice

Post by TylerS7 »

jhfenton wrote: Wed May 02, 2018 1:28 pm
TylerS7 wrote: Wed May 02, 2018 1:17 pm I agree those fees are way too high for a $50k investment account, but for investment accounts less than $8333 Optum is the cheaper option. Lively wasn't talked about on this board until the month after I had JUST switched everything over to Optum. Since Optum is still a couple bucks cheaper right now it wasn't really worth it for me to go through the transfer process again. I was going to wait until my 2019 contribution and the math made sense.
If you have to keep $3,000 in cash earning next to nothing, I would consider that a substantial expense equal to 2.5%-3% per year, depending on what bond fund you compare it to. That's at least $75 per year in lost dividends. Compared to that, I would consider the $2.75 cheaper. That's only 1.1% per year.
I suppose. Although if there wasn’t a minimum I would have just had it all in Total Stock market with the rest of the Investment portion of my HSA. That is down 5% since I opened the investment portion of the account so it looks like their policy has inadvertently saved me $150. Maybe I will celebrate my good fortune by moving to Lively.

The truth is I look at this account once a year when I max it out in January and I wasn’t going to move to Lively until next year. It annoys me that I paid fees the last two months, and so maybe I will move it earlier just so it’s ready to go next January.
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rocket354
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Re: Optum HSA Fee Increase Notice

Post by rocket354 »

ColoradoRob wrote: Wed May 02, 2018 4:02 pm
mmmodem wrote: Wed May 02, 2018 6:17 am I just checked my account and the fee is for an average balance of $500 :oops: (not $5000 ) You scared me there for a moment. :beer Curiously, my previous employer still pays that fee for me.
I re-checked the Optum notice and sure enough it is $5000 (and sadly not $500) for me. I guess this shows that Optum charges everyone a little bit differently. Interesting business model...
The plan you get with them is whatever your employer negotiated. Some employers pay more of what they charge than others. I have Optum and my employer pays all the fees.
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bettykayWAAZ
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Re: Optum HSA Fee Increase Notice

Post by bettykayWAAZ »

I just called Optum (before reading this thread), and learned that there are employer account (all different fees and investment options) and contractor accounts. My husband is retired and young enough to have an HSA for 3 more years. I guess he just became a contractor.

I decided against them because the sales person couldn't tell me what funds were available to contractors. There is a list of funds online, but also a message that says all funds might not be available to all types of accounts. Only after we paid the money can we know what funds are available. I had called them because they listed several Vanguard funds.

I will proceed down my list. Lively is not on my list because I have a bias again tdAmeritrade. After I talk to two more, I might reconsider.
terran
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Re: Optum HSA Fee Increase Notice

Post by terran »

$2.75/month if non-investment balance is under $3000 paid for by employer, 0.03% per month investment fee, $2000 minimum before investing is allowed, $20 transfer fee. We'll be withdrawing and doing an indirect rollover (to avoid the transfer fee) to Lively where the bulk of our HSA money is held (and invested) once per year which is the frequency allowed by the IRS.
michaeljc70
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Re: Optum HSA Fee Increase Notice

Post by michaeljc70 »

I pay Optum no fees (not sure if it is due to my balance or being grandfathered in coming from Wells Fargo acquisition). However, Optum is really geared toward employers. It is a subsidiary of UnitedHealth Group which is the largest health insurance company in the US. They aren't really in business to offer low balance, no fee accounts to individuals. They make money offering the HSA with insurance plans to employers.
TaxingAccount
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Re: Optum HSA Fee Increase Notice

Post by TaxingAccount »

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Last edited by TaxingAccount on Tue Aug 13, 2019 3:26 pm, edited 1 time in total.
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jeffyscott
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Re: Optum HSA Fee Increase Notice

Post by jeffyscott »

TaxingAccount wrote: Sun Aug 11, 2019 9:06 am
terran wrote: Tue Aug 14, 2018 11:52 am $2.75/month if non-investment balance is under $3000, 0.03% per month investment fee, $2000 minimum before investing is allowed
Should you keep the $1,000 in cash to avoid the $2.75 monthly fee or should you invest the $1,000 and pay the fee?
Sounds like it is actually $3000 cash required to avoid $2.75 per month. That's 1.1%, adding 0.36% that to account for the 0.03% per month charge for investing, means less than 1.5% "return" (assuming interest rate on cash is near 0%). So investing and paying the $2.75 seems to be the better option, if it is a $3000 requirement.
The two greatest enemies of the equity fund investor are expenses and emotions. ― John C. Bogle
deltaneutral83
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Re: Optum HSA Fee Increase Notice

Post by deltaneutral83 »

Lively fee structure is $0
Naris
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Re: Optum HSA Fee Increase Notice

Post by Naris »

TaxingAccount wrote: Sun Aug 11, 2019 9:06 am
terran wrote: Tue Aug 14, 2018 11:52 am $2.75/month if non-investment balance is under $3000, 0.03% per month investment fee, $2000 minimum before investing is allowed
Should you keep the $1,000 in cash to avoid the $2.75 monthly fee or should you invest the $1,000 and pay the fee?
As a note for other readers, the thread prior to this point is all from 2018 (May to August), so the above discussion is a bit dated.

Given that people were discussing alternatives, I'll note that since the time this thread was started in 2018, Fidelity has launched their HSA, which has no account fees, requires no minimum cash balance, and you can even invest in index funds with zero fees. This is what I have chosen to do, which has allowed me to invest 100% of my HSA in stocks while paying $0.00 in fees annually.

Of course, there are valid reasons people may not want to deal with the hassle of switching over to Fidelity's HSA. In that case, I agree with Jeffyscott that investing the $3000 and just paying the fee at Optum seems like the superior option, since you ought to be able to achieve at least a 1.5% return that covers the fee.
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jeffyscott
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Re: Optum HSA Fee Increase Notice

Post by jeffyscott »

Naris wrote: Sun Aug 11, 2019 9:32 am
TaxingAccount wrote: Sun Aug 11, 2019 9:06 am
terran wrote: Tue Aug 14, 2018 11:52 am $2.75/month if non-investment balance is under $3000, 0.03% per month investment fee, $2000 minimum before investing is allowed
Should you keep the $1,000 in cash to avoid the $2.75 monthly fee or should you invest the $1,000 and pay the fee?
As a note for other readers, the thread prior to this point is all from 2018 (May to August), so the above discussion is a bit dated.
Thanks for noting that, I actually misread the date on terran's post. I thought it was from the same year as TaxingAccount's reply, failing to realize that if it were, it would have come from the future :) .
The two greatest enemies of the equity fund investor are expenses and emotions. ― John C. Bogle
TaxingAccount
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Re: Optum HSA Fee Increase Notice

Post by TaxingAccount »

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Last edited by TaxingAccount on Tue Aug 13, 2019 3:26 pm, edited 1 time in total.
Naris
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Re: Optum HSA Fee Increase Notice

Post by Naris »

TaxingAccount wrote: Sun Aug 11, 2019 9:46 am
jeffyscott wrote: Sun Aug 11, 2019 9:22 am
TaxingAccount wrote: Sun Aug 11, 2019 9:06 am
terran wrote: Tue Aug 14, 2018 11:52 am $2.75/month if non-investment balance is under $3000, 0.03% per month investment fee, $2000 minimum before investing is allowed
Should you keep the $1,000 in cash to avoid the $2.75 monthly fee or should you invest the $1,000 and pay the fee?
Sounds like it is actually $3000 cash required to avoid $2.75 per month. That's 1.1%, adding 0.36% that to account for the 0.03% per month charge for investing, means less than 1.5% "return" (assuming interest rate on cash is near 0%). So investing and paying the $2.75 seems to be the better option, if it is a $3000 requirement.
No $3,000 cash is required to avoid the 2.75 per month fee but you need to have at least $2,000 in cash before you're allowed to invest. You can't invest the entire $3,000 cash. So should I leave the $1,000 in cash and not pay the 2.75 per month fee or should I invest the $1,000 and pay the fee?
You can make this determination by comparing the effective yield on the marginal $1,000 in cash to the expected return on whatever you would invest the money in. $2.75/month is $33/year, which equates to a 3.3% implied return by holding that money in cash to avoid the fees.

Would you hold that $1,000 in bonds? If so, you should probably keep it in cash to avoid the fees -- it's hard to find bonds paying 3.3% right now unless you take a lot of risk.
Would you hold that $1,000 in stocks? If so, what is your expected return on the stocks? If it's high enough, then you could make a case for investing the $1,000.

Either way, you're talking about a pretty minimal amount of money. My general thought would be to just keep the money in cash and treat it as buying a completely safe bond that yields 3.3%, which is pretty attractive in this low interest rate environment.
TaxingAccount
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Re: Optum HSA Fee Increase Notice

Post by TaxingAccount »

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Last edited by TaxingAccount on Tue Aug 13, 2019 3:26 pm, edited 1 time in total.
Naris
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Re: Optum HSA Fee Increase Notice

Post by Naris »

TaxingAccount wrote: Sun Aug 11, 2019 10:06 am I would invest it in VSMGX.
Then it looks like, historically, you would come out slightly ahead by investing and paying the fee. That said, the 3.3% effective fee is likely to be higher than the return on the 40% of VSMGX that is bonds, even if the overall performance of VSMGX has been higher than 3.3% because of the 60% of VSMGX that is stocks.

All that to say, this strikes me as a pretty close call either way, and you're talking a couple dozen dollars annually in either direction.
rantk81
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Re: Optum HSA Fee Increase Notice

Post by rantk81 »

PayFlex sent me a similar notice on Friday. They are going to start charging me 0.02% per month of my "invested balance". Basically a quarter of a percent per year. More than the expense ratio on a good index fund! I am going to transfer my entire account balance to a new Fidelity HSA soon. However, I am still tied to PayFlex because my employer uses it. I must make my contributions via payroll to be eligible for a small matching contribution, and in order to avoid one of the payroll taxes on the contributed amount.

Side question: Does anyone know if PayFlex will transfer your investments "in-kind" without liquidating them, if you perform a trustee-to-trustee transfer out? If they were able to do this, I'd consider paying them their $25 x-fer fee instead of going the route of an "indirect rollover".
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jeffyscott
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Re: Optum HSA Fee Increase Notice

Post by jeffyscott »

Naris wrote: Sun Aug 11, 2019 10:04 amYou can make this determination by comparing the effective yield on the marginal $1,000 in cash to the expected return on whatever you would invest the money in. $2.75/month is $33/year, which equates to a 3.3% implied return by holding that money in cash to avoid the fees.
If invested, there is apparently a 0.03% monthly fee, so that adds another 0.36% making the risk free return 3.66% (less whatever, likely minimal interest rate they pay on cash). I would take the risk-free return, even if it were as low as 3% in the current interest rate environment.

But if the requirement is as stated, I don't see how this is being interpreted as requiring only $3000 cash?

If the HSA admin says "$3,000 cash is required to avoid the 2.75 per month fee", the fact that you can invest once you have $2000 would generally not change the fee avoidance requirement from the stated $3000 cash.
The two greatest enemies of the equity fund investor are expenses and emotions. ― John C. Bogle
Naris
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Re: Optum HSA Fee Increase Notice

Post by Naris »

jeffyscott wrote: Sun Aug 11, 2019 10:35 am
Naris wrote: Sun Aug 11, 2019 10:04 amYou can make this determination by comparing the effective yield on the marginal $1,000 in cash to the expected return on whatever you would invest the money in. $2.75/month is $33/year, which equates to a 3.3% implied return by holding that money in cash to avoid the fees.
If invested, there is apparently a 0.03% monthly fee, so that adds another 0.36% making the risk free return 3.66% (less whatever, likely minimal interest rate they pay on cash). I would take the risk-free return, even if it were as low as 3% in the current interest rate environment.

But if the requirement is as stated, I don't see how this is being interpreted as requiring only $3000 cash?

If the HSA admin says "$3,000 cash is required to avoid the 2.75 per month fee", the fact that you can invest once you have $2000 would generally not change the fee avoidance requirement from the stated $3000 cash.
Good point about the additional fees. I would also find it pretty hard to turn down a risk free 3.66% return right now, even if stocks have historically outperformed that benchmark.

The $3,000 versus $1,000 distinction is (I think) because Optum requires $2,000 in cash regardless in order to be allowed to invest -- if you only have, say, $1,500 in the Optum HSA account, then you aren't allowed to invest any of it; if you had $4,000 in total Optum HSA account balances, then I think you could invest at most $2,000, since you have to keep at least $2,000 in cash (if I'm understanding it correctly).

Given that premise, avoiding the $2.75/month fee only requires holding an additional $1,000 in cash, since you have to keep $2,000 in cash no matter what (if you stay with Optum, which I wouldn't unless there were other strong reasons...). That's why I calculated the return for avoiding the fee on $1,000, since that's the incremental amount necessary to avoid it.
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jeffyscott
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Re: Optum HSA Fee Increase Notice

Post by jeffyscott »

Oh, I see. Fee avoidance certainly seems to be the better option, then. And I was backwards regarding what they pay on the cash, that would be added to the effective 3.66%.
The two greatest enemies of the equity fund investor are expenses and emotions. ― John C. Bogle
HMdocinPA
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Re: Optum HSA Fee Increase Notice

Post by HMdocinPA »

My company uses Optum but they do not give us any matching HSA contribution. I also have to keep $2k cash before investing, but if I don’t keep $3k cash I have to pay $1/month fee. Between this fee and the 0.03% monthly AUM fee, I’m probably going to just switch to fidelity HSA since I have most of my money there anyway. Because of my income, paycheck deduction only really saves me the Medicare tax and surcharge, not the other fica taxes, so I’m not really missing much tax savings if I just go to fidelity.
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