HSAs savings vs investment accounts and best HSA administrators

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savingsmom
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HSAs savings vs investment accounts and best HSA administrators

Post by savingsmom »

We currently have an HSA and have been using it with some frequency for current expenses. That said, I like the long-term retirement savings it could provide. Right now it is in a basic HSA savings account with BenefitWallet, which is who my husband's employer offers.

I'm confused about a few things:

1. Are you always stuck with an admin fee if you don't use your employer sponsored HSA administrator? How do you deal with this fee issue long-term, especially upon retirement?

2. It seems clear that if we choose to use it as part of our retirement savings, we need to move it from an HSA savings account to an HSA investment account. How do Benefitwallet options compare to other options on the market?

3. Similar question to #2: should we be looking at another HSA administrator and just not go through payroll deductions?
aristotelian
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Re: HSAs savings vs investment accounts and best HSA administrators

Post by aristotelian »

It is really up to your employer and provider what kind of fees they charge for transfers, below minimum balances etc. You need to find that out yourself.

I am able to bypass my employer HSA entirely and direct deposit to Fidelity for completely free investing.
terran
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Re: HSAs savings vs investment accounts and best HSA administrators

Post by terran »

1. No, Fidelity and Lively both offer HSA's without fees for both cash and investment accounts.

2. I don't know how Benefit Wallet compares, but if they charge fees now or after you're no longer employed I would just move it Fidelity (or Lively) now so your investments are all set up there.

3. I would continue to make current year payroll deductions as that most likely also avoids FICA tax on the contributions (if it doesn't at your employer then I wouldn't bother with payroll deductions). You can have more than one HSA, so I would open up a second account elsewhere and keep most of the money there. You can do one indirect rollover (to avoid trustee to trustee transfer fees) per 12 month period (not per calendar year), so I would do that and just keep at most one year of contributions at Benefit Wallet until you've made your rollover the following year.
Topic Author
savingsmom
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Re: HSAs savings vs investment accounts and best HSA administrators

Post by savingsmom »

Thank you - that's very helpful!

I doubt HSA contribution help us any with FICA taxes, although the Medicare surcharge, perhaps. You mean we wouldn't get that back when noting the HSA contribution when we file taxes?
terran
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Re: HSAs savings vs investment accounts and best HSA administrators

Post by terran »

If you're over the social security wage cap (~$130k I think?) then you're right you wouldn't get save that, but you would still save the medicare tax. This assumes your employer is contributing through a section 125 cafeteria plan. That's pretty common since it means they don't pay the employer portion of the taxes. This only works if you make payroll deducted contributions. If you contribute directly to the HSA you get the income tax deduction, but no FICA tax deduction.
TropikThunder
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Re: HSAs savings vs investment accounts and best HSA administrators

Post by TropikThunder »

savingsmom wrote: Sun Jul 21, 2019 10:31 am Thank you - that's very helpful!

I doubt HSA contribution help us any with FICA taxes, although the Medicare surcharge, perhaps. You mean we wouldn't get that back when noting the HSA contribution when we file taxes?
I’m not sure what you’re saying. HSA contributions done via payroll deduction are exempt from income tax and FICA (including Medicare), do not appear in your W-2 box 1 wages, and are not claimed on your tax return since they weren’t included in your income in the first place. HSA contributions done outside of payroll deduction (like from your checking account) are made with after tax dollars but you can then claim them as a deduction (adjustment to income on Schedule 1) when you file.

ETA: didn’t see terran’s re: being over the FICA wage Cap, good point.
Topic Author
savingsmom
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Re: HSAs savings vs investment accounts and best HSA administrators

Post by savingsmom »

Thanks, terran, for helping me understand this piece. So it sounds like the payroll deduction to BenefitWallet is the way to go...Is it true that I can then rollover funds into an investment account elsewhere at any time? (Do administrators set limits?)

Thanks for helping me better understand this!
cas
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Re: HSAs savings vs investment accounts and best HSA administrators

Post by cas »

savingsmom wrote: Mon Jul 22, 2019 6:13 am Thanks, terran, for helping me understand this piece. So it sounds like the payroll deduction to BenefitWallet is the way to go...Is it true that I can then rollover funds into an investment account elsewhere at any time? (Do administrators set limits?)

Thanks for helping me better understand this!
You can do a "trustee-to-trustee transfer" (also sometimes called a "direct rollover") between HSA custodians (e.g. between BenefitWallet and Fidelity) at any time. (Being able to do it any time doesn't mean it is necessarily fast or free.)

You can do a "60-day rollover" (also sometimes called an "indirect rollover") only once every 365 days. Do it more often (or flub up the tax reporting) and great IRS woe will befall you.

I think I recall that the main IRS publication covering HSAs lumps both the above maneuvers under the general heading "Rollovers," then you sort of have to already know that there are these 2 different possible paths in order for the following paragraphs to make sense. It can get confusing because whenever someone (in an IRS publication or here on Bogleheads or in HSA custodian paperwork/customer service communications) says "rollover" you often have to stop, look carefully at the context, and figure out which method they are really referring to.

There is a thread sharing the experiences of several people who moved assets from BenefitWallet (and the associated SaveDaily investment platform) to Fidelity earlier this year. It starts up with issues involving SaveDaily, but then evolves into accounts of both trustee-to-trustee transfers and 60-day rollovers You may find it useful:

"BenefitWallet HSA - anyone successfully liquidated 100% of investments? (update: also transfer/rollover issues)" (roughly January - March 2019), viewtopic.php?t=269173

There is an earlier and useful thread on another experience with someone deciding whether to do a trustee-to-trustee transfer or a 60 day rollover out of BenefitWallet (and proceeding with the 60-day rollover) here:

"Tips for closing out BenefitWallet HSA via direct rollover to new HSA" (February 2018) , viewtopic.php?t=241923
terran
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Re: HSAs savings vs investment accounts and best HSA administrators

Post by terran »

cas wrote: Mon Jul 22, 2019 6:51 am
savingsmom wrote: Mon Jul 22, 2019 6:13 am Thanks, terran, for helping me understand this piece. So it sounds like the payroll deduction to BenefitWallet is the way to go...Is it true that I can then rollover funds into an investment account elsewhere at any time? (Do administrators set limits?)

Thanks for helping me better understand this!
You can do a "trustee-to-trustee transfer" (also sometimes called a "direct rollover") between HSA custodians (e.g. between BenefitWallet and Fidelity) at any time. (Being able to do it any time doesn't mean it is necessarily fast or free.)

You can do a "60-day rollover" (also sometimes called an "indirect rollover") only once every 365 days. Do it more often (or flub up the tax reporting) and great IRS woe will befall you.
+1

The one thing I'll add is that some providers charge a fee when you do a trustee-to-trustee transfer. This is when it is best to do the indirect rollover despite the 12 month restriction.
Topic Author
savingsmom
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Re: HSAs savings vs investment accounts and best HSA administrators

Post by savingsmom »

Hmm....I might be willing to forget about the medicare surcharge tax to avoid the possible headaches...
Angst
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Re: HSAs savings vs investment accounts and best HSA administrators

Post by Angst »

For really common questions like this, the forum has a couple easy to use resources. Please note at the top where you see "Quick Links" and so forth... Just to the right of the "Forum Policies" link is the house icon and the "Wiki" link. The Wiki is full of forum web pages addressing a variety of issues, common & uncommon, of interest to members of the forum. Also up at the top-right of each forum page you see a Google search field. If you enter HSA, the first link that comes up is what you want, i.e. the Wiki page on HSA's. :happy

https://www.bogleheads.org/wiki
https://www.bogleheads.org/wiki/Health_savings_account
Topic Author
savingsmom
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Re: HSAs savings vs investment accounts and best HSA administrators

Post by savingsmom »

Angst wrote: Mon Jul 22, 2019 7:30 am For really common questions like this, the forum has a couple easy to use resources. Please note at the top where you see "Quick Links" and so forth... Just to the right of the "Forum Policies" link is the house icon and the "Wiki" link. The Wiki is full of forum web pages addressing a variety of issues, common & uncommon, of interest to members of the forum. Also up at the top-right of each forum page you see a Google search field. If you enter HSA, the first link that comes up is what you want, i.e. the Wiki page on HSA's. :happy

https://www.bogleheads.org/wiki
https://www.bogleheads.org/wiki/Health_savings_account
Thank you - I had already read that and it did not answer my question.
miamivice
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Re: HSAs savings vs investment accounts and best HSA administrators

Post by miamivice »

savingsmom wrote: Sun Jul 21, 2019 9:54 am We currently have an HSA and have been using it with some frequency for current expenses. That said, I like the long-term retirement savings it could provide. Right now it is in a basic HSA savings account with BenefitWallet, which is who my husband's employer offers.

I'm confused about a few things:

1. Are you always stuck with an admin fee if you don't use your employer sponsored HSA administrator? How do you deal with this fee issue long-term, especially upon retirement?

2. It seems clear that if we choose to use it as part of our retirement savings, we need to move it from an HSA savings account to an HSA investment account. How do Benefitwallet options compare to other options on the market?

3. Similar question to #2: should we be looking at another HSA administrator and just not go through payroll deductions?
1. I am not familiar with the BenefitWallet HSA, but if it allows you to invest your HSA money, I would stick with the employer sponsored HSA.

2. It appears that you can invest using your employer sponsored BenefitWallet HSA, so I would use that.

3. No, just use your employer sponsored HSA if it allows you to invest your money, which I believe it does.
Angst
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Re: HSAs savings vs investment accounts and best HSA administrators

Post by Angst »

savingsmom wrote: Mon Jul 22, 2019 9:16 am
Angst wrote: Mon Jul 22, 2019 7:30 am For really common questions like this, the forum has a couple easy to use resources. Please note at the top where you see "Quick Links" and so forth... Just to the right of the "Forum Policies" link is the house icon and the "Wiki" link. The Wiki is full of forum web pages addressing a variety of issues, common & uncommon, of interest to members of the forum. Also up at the top-right of each forum page you see a Google search field. If you enter HSA, the first link that comes up is what you want, i.e. the Wiki page on HSA's. :happy

https://www.bogleheads.org/wiki
https://www.bogleheads.org/wiki/Health_savings_account
Thank you - I had already read that and it did not answer my question.
My apologies - I hadn't realized that the Wiki still doesn't address moving one's HSA savings from an employer-sponsored HSA plan/provider into one's own choice of HSA Provider. It looks like terran has already been steering you in the right direction:
terran wrote: Sun Jul 21, 2019 10:12 am 1. No, Fidelity and Lively both offer HSA's without fees for both cash and investment accounts.

2. I don't know how Benefit Wallet compares, but if they charge fees now or after you're no longer employed I would just move it Fidelity (or Lively) now so your investments are all set up there.

3. I would continue to make current year payroll deductions as that most likely also avoids FICA tax on the contributions (if it doesn't at your employer then I wouldn't bother with payroll deductions). You can have more than one HSA, so I would open up a second account elsewhere and keep most of the money there. You can do one indirect rollover (to avoid trustee to trustee transfer fees) per 12 month period (not per calendar year), so I would do that and just keep at most one year of contributions at Benefit Wallet until you've made your rollover the following year.
1. I think there's something of a consensus on the board that Lively and Fidelity are the top HSA choices

2. If you have on-going benefits from using an employer sponsored plan, e.g. to get extra or matching contribution from employer, you still benefit from annually moving $ out of that plan and into your Fidelity or Lively HSA.

3. ditto
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BL
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Re: HSAs savings vs investment accounts and best HSA administrators

Post by BL »

Did you look at the specific info on your HSA?
https://www.bogleheads.org/wiki/Health_ ... efitWallet
It lists the available Vanguard index funds, as all others are high-cost. There is a pretty thorough discussion on this most common company, and evidently costs vary quite a bit depending on your company and how much money you have in it.
Aku09
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Re: HSAs savings vs investment accounts and best HSA administrators

Post by Aku09 »

I have BenefitWallet through my employer. No issues really. They sent me a debit card and I’ve never had a problem using it. Fees for us are $2.90 a month for the hsa and an extra $2.90 a month for the investment portion if you want to use it. Honestly it has lower fees than my 401k and has vitsx so I put it all in there.

I only tried to move money from the investment portion back to the regular account once and it was a bit of a pain (had an ER bill from DW that was 3k). Had to call a couple times and they wanted me to fill out some form to do it and it would take a couple weeks, but eventually a manager said he would give me a one time exception and move the money back without doing the paperwork. Not sure if that’s standard or not, but it got done and all is well.
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