I think my BenefitWallet HSA -> Fidelity HSA transfer is now a done deal:
This morning the HSA funds I sent via check (60-Day rollover transfer method) are listed as available for investing at Fidelity, with the transaction correctly described as "Rollover Cash Check Received."
BenefitWallet shows an image of the cancelled check in Transactions, the Available Balance has been reduced by the proper amount, and the amount is listed under "Distributions." (Categorizing the withdrawal as a regular distribution on the BenefitWallet side is correct, since I used the 60-day rollover transfer method. It would be Very Wrong for a trustee-to-trustee transfer.)
Tying up some loose ends:
Timeline for my 60-day Rollover:
Total Time: 23 total days, 15 business days
-Liquidating Investments at SaveDaily and ACH-ing to BenefitWallet: 13 total days, 10 business days (1/6 - 1/18)
- Ordering and Receiving BenefitWallet checkbook: 11 total days, 8 business days (1/15 - 1/25)
- Mailing and processing of the BenefitWallet check to Fidelity: 3 total days, 1 business day ( (1/26-1/28)
Transfer Method Decision
There are 2 IRS-approved methods to get funds from one HSA custodian to another HSA custodian:
1. trustee-to-trustee transfer
(use the Fidelity transfer form for this method). This method is generally considered safer and less error-prone, provided you have competent trustees on both ends. However, I decided that it is an open question whether BenefitWallet is consistently competent in handling their end of a trustee-to-trustee transfer.
2. 60-day rollover
. (involves writing a check to the new HSA custodian) This method has more ways for you to shoot yourself in the foot and get in tax woe with the IRS, so don't do it unless you read up on it.
Good starting points for becoming familiar with the 60-day rollover method:
- hoppy08520's excellent post "Tips for closing out BenefitWallet HSA via direct rollover to new HSA" viewtopic.php?t=241923
- the discussion by multiple people in "Reasons to avoid indirect HSA rollover?" viewtopic.php?t=266089
Despite the potential risks of the 60-day rollover method, I decided to use this method. I decided that the risk that BenefitWallet (as a company repeatedly reported to do inept and/or shady things) would bungle the execution and tax-reporting of a trustee-to-trustee transfer was greater than the risk that I would bungle the execution and tax-reporting of a 60-day rollover. This was a gut-feel type decision on my part, and I certainly wouldn't argue with anyone who decides that they still think a trustee-to-trustee transfer from BenefitWallet to Fidelity is safer and less error-prone.
Mechanics of Doing a 60-Day Rollover to Fidelity
If someone decides to use the 60-day rollover method, there are several ways you can get the funds into your possession before sending them on to Fidelity. I chose to use a BenefitWallet checkbook check written directly, by me, to Fidelity because:
1. The money would never be in my personal checking account with the 60-day clock ticking. The check would either be accepted or rejected. If the transaction succeeds, the money is happily at Fidelity. If it fails, it is still at BenefitWallet, and the 60 day clock never started.
2. Should something go wrong (e.g. either BenefitWallet or Fidelity flubs the tax forms that they need to send me in early 2020), there is an obvious paper trail of what I intended that I can show to them and/or the IRS. (A check made out to Fidelity with "60 day rollover" and my account # written on it, plus the deposit slip with "60 day rollover" marked on it, plus the image of the cancelled check after it was processed by Fidelity/BenefitWallet)
Specific Fidelity forms to use for a 60-day rollover:
-Fidelity's instructions on how to fill out the check when doing a 60-day rollover: https://www.fidelity.com/cash-management/contribute-hsa
("Other Ways to Contribute to Your HSA", Item #5 "Roll over contributions from another HSA"
-A Fidelity deposit slip with the "60-Day Rollover" checkbox marked. https://www.fidelity.com/bin-public/060 ... t-slip.pdf
(Note: this deposit slip has a weirdness - the total deposit amount must end in a 0, e.g. xx,xxx.x0 . This was not a problem for me, since I was leaving a bit behind in the BenefitWallet account anyway, to cover upcoming fees and avoid bouncing the check. You'll have to call Fidelity and ask what to do if you are trying to take your BenefitWallet account to $0 all in one go with a single check.)
Tasks still to do:
- Let BenefitWallet account activity associated with month-end settle. Since I didn't want the check I sent to Fidelity to bounce, I held back about $15 to cover any possible fees (BenefitWallet monthly + possible SaveDaily monthly + possible checkbook fee) . Since it is now so close to 1/31 (BenefitWallet Fee Day), I'll let that day go past, let the BenefitWallet fee and January interest post, plus see whether my missing Vanguard Total Bond Market dividends show up at SaveDaily.
- Zero out the BenefitWallet account. Once all that activity has settled, I'll write another BenefitWallet check (check #2) for the small amount remaining in my BenefitWallet account and deposit it in my personal checking account. I'll pull one of the not-yet-HSA-reimbursed medical spending receipts I've saved over the years out of the pile and report the check#2 amount as a qualified distribution used for medical purposes on my 2019 tax return (due April 2020).
- Close the BenefitWallet account. Once check #2 has cleared, I'll call BenefitWallet and close the HSA account, so that they don't try to continue to charge me fees on an account with $0 balance.
-2019 Tax Reporting. I'll need to fill out Form 8889 to report the 60-day rollover on my 2019 tax return (due April 2020).