[Fidelity Health Savings Account Mega-Thread]

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furwut
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by furwut » Sat Nov 16, 2019 11:08 pm

Also, this is pure speculation on my part, but is Lively really going to be around for the long haul?
That’s a good point. They’re a gee-whiz startup but Fidelity has the resources.

illumination
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by illumination » Sun Nov 17, 2019 1:32 pm

furwut wrote:
Sat Nov 16, 2019 11:08 pm
Also, this is pure speculation on my part, but is Lively really going to be around for the long haul?
That’s a good point. They’re a gee-whiz startup but Fidelity has the resources.
Exactly, and I get nervous about that when they make zero dollars on customers like me. Or at least it seems that way. I literally dump every penny from them into TD Ameritrade and then buy equity funds. And they no longer charge any fees. I'm sure some clients they do make money, like people that just leave a cash balance or maybe large companies that use them, but it seems like a risky business plan when larger institutions can just afford to make it a loss leader.

At least with Fidelity, I can understand their model of not making money on HSAs so they can sell other services and accounts.

azianbob
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by azianbob » Thu Dec 05, 2019 6:00 pm

After we create an HSA online at Fidelity, do you call Fidelty to start the rollover process or do you call your prior HSA provider? Or are there instructions online?

tj
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by tj » Thu Dec 05, 2019 7:35 pm

azianbob wrote:
Thu Dec 05, 2019 6:00 pm
After we create an HSA online at Fidelity, do you call Fidelty to start the rollover process or do you call your prior HSA provider? Or are there instructions online?
it's all online. I had to print forms nad mail them to Fidelity. I took them to a branch instead.

ej0160
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by ej0160 » Fri Dec 06, 2019 5:19 am

azianbob wrote:
Thu Dec 05, 2019 6:00 pm
After we create an HSA online at Fidelity, do you call Fidelty to start the rollover process or do you call your prior HSA provider? Or are there instructions online?
While you can perform the transfer process from either your existing HSA provider or from new Fidelity account, I would recommend from Fidelity. Fidelity has an incentive to get it processed faster since they are receiving funds, while your existing provider has incentive to delay as long as possible to keep your existing funds.

If you decide to perform the transfer from Fidelity side, go to summary tab on your new HSA account and there should be an option to “Transfer Assets From an Outside HSA”. Otherwise you can navigate to Account & Position -> Transfer and start it from there. You can fill out the preliminary information online, and then most likely you will be given a "Transfer of Assets" form (with your filled out information) to print, sign, and mail in.

azianbob
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by azianbob » Mon Dec 09, 2019 2:01 pm

Okay, so the process is first to go to Fidelity and create a personal HSA, then go to the transfers section as described and kick off the process? There is no human interaction involved? I just need the account numbers of the old HSA?

ej0160
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by ej0160 » Mon Dec 09, 2019 6:17 pm

azianbob wrote:
Mon Dec 09, 2019 2:01 pm
Okay, so the process is first to go to Fidelity and create a personal HSA, then go to the transfers section as described and kick off the process? There is no human interaction involved? I just need the account numbers of the old HSA?
Correct. From what I recall, the only other item you may need is recent monthly statement from your current HSA provider to send in with transfer form to Fidelity.

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giacomo_bogle
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by giacomo_bogle » Mon Dec 09, 2019 6:35 pm

ej0160 wrote:
Mon Dec 09, 2019 6:17 pm
azianbob wrote:
Mon Dec 09, 2019 2:01 pm
Okay, so the process is first to go to Fidelity and create a personal HSA, then go to the transfers section as described and kick off the process? There is no human interaction involved? I just need the account numbers of the old HSA?
Correct. From what I recall, the only other item you may need is recent monthly statement from your current HSA provider to send in with transfer form to Fidelity.
Correct. No human interactions. I transferred from HSA Bank, the whole process took about a week.
HSA Bank did deduct $10 as "HSA Check Distribution Fee".

azianbob
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by azianbob » Tue Dec 10, 2019 12:14 pm

I don't have to sell off my investments in my current investments and move everything to checking before right? If I fill out the transfer form at Fidelity it will be for the whole balance so my current HSA will sell off all the mutual funds and transfer the whole balance over?

Or is it safer for me to sell off my mutual funds prior to initiating the transfer?

veggivet
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by veggivet » Tue Dec 10, 2019 12:18 pm

No need to sell before transfer.
If you watch your pennies, your dollars will take care of themselves.

cas
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by cas » Tue Dec 10, 2019 12:41 pm

azianbob wrote:
Tue Dec 10, 2019 12:14 pm
I don't have to sell off my investments in my current investments and move everything to checking before right?
The answer to this question is highly dependent on which HSA custodian you are transferring from. For example ... - - -
  • BenefitWallet: definitely yes (you do have to manually sell at SaveDaily and move assets back to checking)
  • Optum: pretty sure I've seen multiple people say yes, you do have to sell.
  • Any HSA custodian (Lively, HSA Bank) where the investments are held in a TD Ameritrade account: no, you don't have to sell. Assets at TDA can be transferred in-kind, but you have to fill in the Fidelity paperwork a specific way. And who knows how the recently announced acquisition of TD Ameritrade with Schwab affected that policy.
I scrolled back a several posts and didn't see that you specified which HSA custodian you were coming from. Maybe I missed it. However, unless you have an unusual/small HSA custodian, if you enter something like "HSA Fidelity <your current HSA custodian>" in the search box at the top of this page, you have a good chance of finding threads where people talk about their experience with transferring from your custodian to Fidelity.

For that matter, for all the major HSA custodians, there is detailed discussion of the steps necessary in the previous 20 pages of this thread. Plus exactly how to fill in the Fidelity forms. Plus advice on what message pops up where in the Fidelity interface if a snag is encountered. Admittedly, it is a bit of a read, but judicious use of the browser's "find" capability can help find relevant posts.

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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by Tommy » Tue Dec 10, 2019 1:22 pm

veggivet wrote:
Tue Dec 10, 2019 12:18 pm
No need to sell before transfer.
Actually it might not be true. I was transferring from Optum Bank to Fidelity and sold investment, although they told me that everything will be liquidated automatically. Turns out that after I sold and before Fidelity initiated transfer, dividend was posted in investment account. It still there, it wasn't part of transfer.

azianbob
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by azianbob » Tue Dec 10, 2019 7:58 pm

I currently have my HSA in BenefitWallet, and invest through save daily. However on 1/1/2020 the company is moving the HSA custodian to PNC Bank.

However, I had a life event in November 2019 where I stopped getting medical through my company and moved to wife's benefits. So I am not sure if my HSA balance will get moved along with everyone else on 1/1 or remain in BenefitWallet. I guess I will find out on 1/2.

Global100
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by Global100 » Wed Jan 01, 2020 9:28 pm

I will contribute to my Fidelity HSA account now that I am enrolled in a HDHP. I have a $50 covered expense I incurred today 01-01-2020 that I would like to claim now (instead of years later). Questions:

Do I only deposit $3500 in the HSA and keep $50 in my bank account, but still claim $3550 as my HSA deduction for 2020 Federal taxes filed next year? or

Do I need to fully fund all $3550 in the HSA account, let the funds settle for a few business days, and then withdraw/transfer $50 out of the HSA account next week?

Finally, how do I designate that the $50 withdrawal is for a qualified medical expense so it won't be penalized/taxed? Does the Fidelity online platform ask if the withdrawal is qualified, or is it my own accounting responsibility?

Thank you.

Gryphon
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by Gryphon » Wed Jan 01, 2020 10:07 pm

Global100 wrote:
Wed Jan 01, 2020 9:28 pm
I will contribute to my Fidelity HSA account now that I am enrolled in a HDHP. I have a $50 covered expense I incurred today 01-01-2020 that I would like to claim now (instead of years later). Questions:

Do I only deposit $3500 in the HSA and keep $50 in my bank account, but still claim $3550 as my HSA deduction for 2020 Federal taxes filed next year? or

Do I need to fully fund all $3550 in the HSA account, let the funds settle for a few business days, and then withdraw/transfer $50 out of the HSA account next week?

Finally, how do I designate that the $50 withdrawal is for a qualified medical expense so it won't be penalized/taxed? Does the Fidelity online platform ask if the withdrawal is qualified, or is it my own accounting responsibility?

Thank you.
If you want to take credit for a $3550 HSA contribution on your tax return, you need to actually contribute $3550. Fidelity is going to report to the IRS how much money you put in. If they report you deposited $3500 and you try to claim $3550 I think it's going to raise some eyebrows at the IRS.

As for how you handle the withdrawal, I'm not sure. I've haven't yet used my HSA to pay for any medical expenses, I'm letting it build up to use it later.

tj
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by tj » Wed Jan 01, 2020 10:22 pm

I've only spent on medical expenses from an HSA debit card. It seems simpler.

Lyrrad
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by Lyrrad » Thu Jan 02, 2020 1:30 am

Global100 wrote:
Wed Jan 01, 2020 9:28 pm
I will contribute to my Fidelity HSA account now that I am enrolled in a HDHP. I have a $50 covered expense I incurred today 01-01-2020 that I would like to claim now (instead of years later).
Have you established and funded any HSA account yet? From what I can tell, expenses from prior to the date of establishment of the HSA wouldn't count as a qualified expense for the HSA.

From what I can tell, the date the HSA is established is dependent on state law, and Utah allows the HSA establishment date to be retroactive to the first day of HDHP coverage. This page suggests that only Utah allows this.

Global100
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by Global100 » Thu Jan 02, 2020 1:47 am

Lyrrad wrote:
Thu Jan 02, 2020 1:30 am
Global100 wrote:
Wed Jan 01, 2020 9:28 pm
I will contribute to my Fidelity HSA account now that I am enrolled in a HDHP. I have a $50 covered expense I incurred today 01-01-2020 that I would like to claim now (instead of years later).
Have you established and funded any HSA account yet? From what I can tell, expenses from prior to the date of establishment of the HSA wouldn't count as a qualified expense for the HSA.

From what I can tell, the date the HSA is established is dependent on state law, and Utah allows the HSA establishment date to be retroactive to the first day of HDHP coverage. This page suggests that only Utah allows this.
To be on the safe side: I will return the unused/unopened item (over-the-counter), fund my HSA account on Thursday 1/2, and then rebuy the item later. Thanks.

Lyrrad
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by Lyrrad » Thu Jan 02, 2020 1:58 am

Global100 wrote:
Thu Jan 02, 2020 1:47 am
To be on the safe side: I will return the unused/unopened items (over-the-counter), fund my HSA account on Thursday, and rebuy them on Friday 1/3.
That seems safest.

To answer your other questions, here's my understanding (I haven't done an HSA withdrawal yet):

You can establish an HSA account with as little as a dollar. Once it is established, qualified expenses from that date can be reimbursed. Amounts deposited and withdrawn will eventually be reported to the IRS, and you should report this on your tax return. I believe that the HSA provider reports that there is a withdrawal on a 1099-SA, but not whether or not it was qualified. Then on form 8889 you can report your HSA contributions (Lines 2 and 9) and withdrawals (Line 14a) and whether or not the withdrawals were qualified (Lines 15 and 16). Keep sufficient records to show that the HSA distribution was qualified if there is an IRS audit.

Jablean
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by Jablean » Thu Jan 02, 2020 3:14 am

You don't have to cash out wherever you have your current HSA. In Fidelity's transfer paperwork it will ask you if you want to transfer in-kind or liquidate. Just tell them to liquidate and Fidelity will take care of it.

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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by LadyGeek » Sat Jan 11, 2020 10:02 pm

First, I'd like to correct a much earlier post in which I stated my HSA provider was Optum Bank. Sorry, I got mixed up. Optum was my pharmacy provider (OptumRx). My HSA provider is UMB Bank.

For 2020, my employer has changed HSA providers yet again. The new HSA provider is offering to cover the UMB Bank termination fees if you go with them. However, Fidelity will also cover those fees.

I started the transfer and am now waiting for the magic to happen. Here's what I did.

1. Created a new HSA account at Fidelity. Do this first, as the transfer the process can be done online once the account is established.

2. Called Fidelity's Health Savings Account (HSA) group at 800-544-3716 (8:30 a.m. to 8:00 p.m., Eastern time, Monday through Friday) to confirm they'll cover the UMB bank termination fee. Yes. Once the transfer is complete, they'll cover the cost.

2a. A representative walked me through the transfer process. You need to get to right transfer screen to start an HSA transfer. If you have an existing account, view your portfolio, then click on the Black menu button marked "Transfer" . If you don't see a black menu under the green one, stop and call for help. From there, it's "See more transfer options", then "Transfer assets from another institution". Start the transfer and follow the instructions.

I was impressed as there was a drop-down box showing a ton of HSA providers. I selected umb bank and completed the application.

The end result is a customized PDF file with all of the info filled in for you. Print and sign the PDF. You do NOT need a Medallion Signature (it's on the form, but is optional).

2. Print a copy of your latest HSA statement from your current provider.

3. Mail your statement and the Transfer Of Assets form to the address on the last page of the Fidelity form.

4. You'll get an email notifying you of the transfer. Track your transfer online. For me, the transfer will be completed 14 days after they get the paperwork.
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by UnclePennybags » Tue Jan 21, 2020 3:18 pm

As a heads-up to anyone doing the online transfer, you might want to check out the transfer status page on your Fidelity account every few days while you wait for the transfer to post. My transfer had a glitch and they said something like "More information required" on the status page. When I called them, they were having trouble figuring out the symbol for one of the mutual funds in my old account. I told them as far as I was concerned they could just liquidate the account and transfer the cash balance and they said that would solve the problem. The final transfer posted a week or so later and I received a printed notification of the "more information required" inquiry in the mail a few days after that. So, it would have sat for about 10 days waiting for me to get the mail if I didn't notice the status page.

Admittedly, our regional post office are the absolute worst, so maybe you wouldn't wait quite so long, but it does pay to monitor the transfer screen.

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Re: [Fidelity Health Savings Accounts Mega-Thread]

Post by LadyGeek » Tue Jan 21, 2020 9:09 pm

Good idea. My transfer's expected completion date is 02/05/20.

This thread has been on-going since Nov 11, 2018. I figured it was about time to change the thread title, so I did.

Update 1/22/2020: Fixed a spelling typo in the thread title "Accounts" to "Account".
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Third Son
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[Fidelity Health Savings Accounts Mega-Thread]-QUERY

Post by Third Son » Wed Jan 22, 2020 8:00 am

Good morning all,

I have to admit I did not read this entire thread, but have done some research into my situation at Fidelity and other searched sources.

I am set to retire on Feb 29th 2020. All of my investment assets are with Fidelity (IRA, Roth IRA). In retirement, I will be in a HDHCP and as such, I believe I am eligible to contribute to an HSA.

I opened an HSA account at Fidelity this morning but have not yet funded it since my HDHCP starts March 1, 2020. From my reading, would itbe valid to move some of my pre-tax IRA money to the Fidelity HSA after March 1st? I see it is a one-time event so I want to make sure I hit the max contribution.

I assume this would count as income (taxable event) that I could deduct from my income tax? Not sure about this.

To make sure I am doing this right I wanted to ask here first.
"A part of all you earn is yours to keep" | | -The Richest Man in Babylon

diy60
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by diy60 » Wed Jan 22, 2020 8:30 am

LadyGeek wrote:
Sat Jan 11, 2020 10:02 pm

The end result is a customized PDF file with all of the info filled in for you. Print and sign the PDF. You do NOT need a Medallion Signature (it's on the form, but is optional).

2. Print a copy of your latest HSA statement from your current provider.

3. Mail your statement and the Transfer Of Assets form to the address on the last page of the Fidelity form.
I did all of the underlined electronically. I recall the online application provided for uploading attached statements. Also, the customized PDF included e-signature which I immediately received via email and then e-signed and returned electronically. I don't recall exactly but I think the whole process took about 5 business days to transfer (HSA Bank/TD Amertrade combo).

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Third Son
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Re: [Fidelity Health Savings Accounts Mega-Thread]-QUERY

Post by Third Son » Wed Jan 22, 2020 8:54 am

Third Son wrote:
Wed Jan 22, 2020 8:00 am
Good morning all,

I have to admit I did not read this entire thread, but have done some research into my situation at Fidelity and other searched sources.

I am set to retire on Feb 29th 2020. All of my investment assets are with Fidelity (IRA, Roth IRA). In retirement, I will be in a HDHCP and as such, I believe I am eligible to contribute to an HSA.

I opened an HSA account at Fidelity this morning but have not yet funded it since my HDHCP starts March 1, 2020. From my reading, would itbe valid to move some of my pre-tax IRA money to the Fidelity HSA after March 1st? I see it is a one-time event so I want to make sure I hit the max contribution.

I assume this would count as income (taxable event) that I could deduct from my income tax? Not sure about this.

To make sure I am doing this right I wanted to ask here first.
Edit: I just spoke with Fidelity. I will defer funding until Jan 2021 since any contribution I make this year will be pro-rated for the month I make the contribution. 5/6 * $7100= $5893+ 1000 = $6893 for 2020 (vs $8100 for 2021).
"A part of all you earn is yours to keep" | | -The Richest Man in Babylon

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Re: [Fidelity Health Savings Accounts Mega-Thread]-QUERY

Post by jeffyscott » Wed Jan 22, 2020 9:18 am

Third Son wrote:
Wed Jan 22, 2020 8:54 am
Third Son wrote:
Wed Jan 22, 2020 8:00 am
Good morning all,

I have to admit I did not read this entire thread, but have done some research into my situation at Fidelity and other searched sources.

I am set to retire on Feb 29th 2020. All of my investment assets are with Fidelity (IRA, Roth IRA). In retirement, I will be in a HDHCP and as such, I believe I am eligible to contribute to an HSA.

I opened an HSA account at Fidelity this morning but have not yet funded it since my HDHCP starts March 1, 2020. From my reading, would itbe valid to move some of my pre-tax IRA money to the Fidelity HSA after March 1st? I see it is a one-time event so I want to make sure I hit the max contribution.

I assume this would count as income (taxable event) that I could deduct from my income tax? Not sure about this.

To make sure I am doing this right I wanted to ask here first.
Edit: I just spoke with Fidelity. I will defer funding until Jan 2021 since any contribution I make this year will be pro-rated for the month I make the contribution. 5/6 * $7100= $5893+ 1000 = $6893 for 2020 (vs $8100 for 2021).
I'm not sure that I understand your decision to delay funding to 2021, unless you are only talking about the IRA transfer part. If you contribute $6893 for 2020 that will be fully deductible, if I understand correctly.

I'm not sure exactly how the one time transfer thing works, but I believe it is of no value if you are able to withdraw funds from your IRA, without penalty (i.e. will be at least 59.5 on Dec. 31, 2020). If you withdraw, say, $5000 from your IRA and contribute $5000 to the HSA, that is $5000 of taxable income and then a $5000 deduction to offset that income. So there is no net taxable income by doing it that way, the same result as if you transferred the funds from the IRA directly to the HSA using that one-time provision.
Time is your friend; impulse is your enemy. - John C. Bogle

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Third Son
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Re: [Fidelity Health Savings Accounts Mega-Thread]-QUERY

Post by Third Son » Wed Jan 22, 2020 9:29 am

jeffyscott wrote:
Wed Jan 22, 2020 9:18 am
Third Son wrote:
Wed Jan 22, 2020 8:54 am
Third Son wrote:
Wed Jan 22, 2020 8:00 am
Good morning all,

I have to admit I did not read this entire thread, but have done some research into my situation at Fidelity and other searched sources.

I am set to retire on Feb 29th 2020. All of my investment assets are with Fidelity (IRA, Roth IRA). In retirement, I will be in a HDHCP and as such, I believe I am eligible to contribute to an HSA.

I opened an HSA account at Fidelity this morning but have not yet funded it since my HDHCP starts March 1, 2020. From my reading, would itbe valid to move some of my pre-tax IRA money to the Fidelity HSA after March 1st? I see it is a one-time event so I want to make sure I hit the max contribution.

I assume this would count as income (taxable event) that I could deduct from my income tax? Not sure about this.

To make sure I am doing this right I wanted to ask here first.
Edit: I just spoke with Fidelity. I will defer funding until Jan 2021 since any contribution I make this year will be pro-rated for the month I make the contribution. 5/6 * $7100= $5893+ 1000 = $6893 for 2020 (vs $8100 for 2021).
I'm not sure that I understand your decision to delay funding to 2021, unless you are only talking about the IRA transfer part. If you contribute $6893 for 2020 that will be fully deductible, if I understand correctly.

I'm not sure exactly how the one time transfer thing works, but I believe it is of no value if you are able to withdraw funds from your IRA, without penalty (i.e. will be at least 59.5 on Dec. 31, 2020). If you withdraw, say, $5000 from your IRA and contribute $5000 to the HSA, that is $5000 of taxable income and then a $5000 deduction to offset that income. So there is no net taxable income by doing it that way, the same result as if you transferred the funds from the IRA directly to the HSA using that one-time provision.
Yes only referring to the IRA transfer part. Delay until 2021 was because the IRA-->HSA transfer is a one-time event and I want to maximize that movement of funds. It is not a taxable exercise so no need for tax deduction.
"A part of all you earn is yours to keep" | | -The Richest Man in Babylon

sycamore
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Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th [2018]

Post by sycamore » Wed Jan 22, 2020 9:49 am

mervinj7 wrote:
Mon Oct 14, 2019 12:21 pm
For those that may not be aware, Fidelity's Institutional Premium Class Freedom Index Target Date Funds are available for purchase in their HSA accounts. For example, FFOPX (2050 Fund) has a ultra-low ER of 0.08% (vs. 0.12% for FIPFX) and normally has a minimum purchase of $100M. Although, most folks would be better served by just investing in a single equity fund or Treasury bond/bill ladder (for us "lucky" CA folks), it's another option.

FFOPX: https://fundresearch.fidelity.com/mutua ... /315793570

https://www.fidelity.com/bin-public/060 ... nsider.pdf
mervinj7, thanks for posting this. I was not aware. Better late than never :)

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Re: [Fidelity Health Savings Accounts Mega-Thread]-QUERY

Post by jeffyscott » Wed Jan 22, 2020 9:51 am

Third Son wrote:
Wed Jan 22, 2020 9:29 am
jeffyscott wrote:
Wed Jan 22, 2020 9:18 am
Third Son wrote:
Wed Jan 22, 2020 8:54 am
Third Son wrote:
Wed Jan 22, 2020 8:00 am
Good morning all,

I have to admit I did not read this entire thread, but have done some research into my situation at Fidelity and other searched sources.

I am set to retire on Feb 29th 2020. All of my investment assets are with Fidelity (IRA, Roth IRA). In retirement, I will be in a HDHCP and as such, I believe I am eligible to contribute to an HSA.

I opened an HSA account at Fidelity this morning but have not yet funded it since my HDHCP starts March 1, 2020. From my reading, would itbe valid to move some of my pre-tax IRA money to the Fidelity HSA after March 1st? I see it is a one-time event so I want to make sure I hit the max contribution.

I assume this would count as income (taxable event) that I could deduct from my income tax? Not sure about this.

To make sure I am doing this right I wanted to ask here first.
Edit: I just spoke with Fidelity. I will defer funding until Jan 2021 since any contribution I make this year will be pro-rated for the month I make the contribution. 5/6 * $7100= $5893+ 1000 = $6893 for 2020 (vs $8100 for 2021).
I'm not sure that I understand your decision to delay funding to 2021, unless you are only talking about the IRA transfer part. If you contribute $6893 for 2020 that will be fully deductible, if I understand correctly.

I'm not sure exactly how the one time transfer thing works, but I believe it is of no value if you are able to withdraw funds from your IRA, without penalty (i.e. will be at least 59.5 on Dec. 31, 2020). If you withdraw, say, $5000 from your IRA and contribute $5000 to the HSA, that is $5000 of taxable income and then a $5000 deduction to offset that income. So there is no net taxable income by doing it that way, the same result as if you transferred the funds from the IRA directly to the HSA using that one-time provision.
Yes only referring to the IRA transfer part. Delay until 2021 was because the IRA-->HSA transfer is a one-time event and I want to maximize that movement of funds. It is not a taxable exercise so no need for tax deduction.
Note that HSA contribution is an "above the line" deduction that will appear on 1040 line 8a (from line 12, sch. 1), so withdrawing from an IRA and then contributing the same amount to the HSA also does not result in any taxable income.
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Re: [Fidelity Health Savings Accounts Mega-Thread]-QUERY

Post by Third Son » Wed Jan 22, 2020 10:00 am

jeffyscott wrote:
Wed Jan 22, 2020 9:51 am
Third Son wrote:
Wed Jan 22, 2020 9:29 am
jeffyscott wrote:
Wed Jan 22, 2020 9:18 am
Third Son wrote:
Wed Jan 22, 2020 8:54 am
Third Son wrote:
Wed Jan 22, 2020 8:00 am
Good morning all,

I have to admit I did not read this entire thread, but have done some research into my situation at Fidelity and other searched sources.

I am set to retire on Feb 29th 2020. All of my investment assets are with Fidelity (IRA, Roth IRA). In retirement, I will be in a HDHCP and as such, I believe I am eligible to contribute to an HSA.

I opened an HSA account at Fidelity this morning but have not yet funded it since my HDHCP starts March 1, 2020. From my reading, would itbe valid to move some of my pre-tax IRA money to the Fidelity HSA after March 1st? I see it is a one-time event so I want to make sure I hit the max contribution.

I assume this would count as income (taxable event) that I could deduct from my income tax? Not sure about this.

To make sure I am doing this right I wanted to ask here first.
Edit: I just spoke with Fidelity. I will defer funding until Jan 2021 since any contribution I make this year will be pro-rated for the month I make the contribution. 5/6 * $7100= $5893+ 1000 = $6893 for 2020 (vs $8100 for 2021).
I'm not sure that I understand your decision to delay funding to 2021, unless you are only talking about the IRA transfer part. If you contribute $6893 for 2020 that will be fully deductible, if I understand correctly.

I'm not sure exactly how the one time transfer thing works, but I believe it is of no value if you are able to withdraw funds from your IRA, without penalty (i.e. will be at least 59.5 on Dec. 31, 2020). If you withdraw, say, $5000 from your IRA and contribute $5000 to the HSA, that is $5000 of taxable income and then a $5000 deduction to offset that income. So there is no net taxable income by doing it that way, the same result as if you transferred the funds from the IRA directly to the HSA using that one-time provision.
Yes only referring to the IRA transfer part. Delay until 2021 was because the IRA-->HSA transfer is a one-time event and I want to maximize that movement of funds. It is not a taxable exercise so no need for tax deduction.
Note that HSA contribution is an "above the line" deduction that will appear on 1040 line 8a (from line 12, sch. 1), so withdrawing from an IRA and then contributing the same amount to the HSA also does not result in any taxable income.
Agreed...but since my IRA is with Fidelity as well, I can do a direct transfer.
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Re: [Fidelity Health Savings Accounts Mega-Thread]-QUERY

Post by cas » Wed Jan 22, 2020 10:10 am

Third Son wrote:
Wed Jan 22, 2020 8:00 am
I am set to retire on Feb 29th 2020. [. . .] In retirement, I will be in a HDHCP and as such, I believe I am eligible to contribute to an HSA.
Does your new insurance have the word "HSA" prominently displayed in its name ? If not, you will want to call the insurer and confirm that it is an "HSA-eligible" HDHP.

Having HDHP insurance is a necessary, but not sufficient, condition for insurance being "HSA eligible". For more information see this blog post from bogleheads poster tfb (The Finance Buff blog): Not All High Deductible Plans Are HSA Eligible
[...] would itbe valid to move some of my pre-tax IRA money to the Fidelity HSA


Do you have no other dollars you can use to make the HSA contribution? Bogleheads' analysis finds the tIRA to HSA transfer falling in the category of "just because you can do it doesn't mean that you should" for most cases.

Here's what the Boglehead's wiki on Health Savings Accounts says about the tIRA -> HSA maneuver:
You can make a once in a lifetime rollover or transfer from an IRA to an HSA up to the annual HSA funding limit. This is usually not advised since you would lose the ability to contribute and take an HSA tax deduction for the amount you transfer, but it can be an emergency source of funds without paying taxes or penalties.
There was a recent (last couple of months, I think?) thread where this maneuver and its tax math was thoroughly presented and discussed, but, unfortunately, I can't get google or the bogleheads' advanced search to turn it up for me.

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Re: [Fidelity Health Savings Accounts Mega-Thread]-QUERY

Post by Third Son » Wed Jan 22, 2020 11:24 am

cas wrote:
Wed Jan 22, 2020 10:10 am
Third Son wrote:
Wed Jan 22, 2020 8:00 am
I am set to retire on Feb 29th 2020. [. . .] In retirement, I will be in a HDHCP and as such, I believe I am eligible to contribute to an HSA.
Does your new insurance have the word "HSA" prominently displayed in its name ? If not, you will want to call the insurer and confirm that it is an "HSA-eligible" HDHP.

Having HDHP insurance is a necessary, but not sufficient, condition for insurance being "HSA eligible". For more information see this blog post from bogleheads poster tfb (The Finance Buff blog): Not All High Deductible Plans Are HSA Eligible
[...] would itbe valid to move some of my pre-tax IRA money to the Fidelity HSA


Do you have no other dollars you can use to make the HSA contribution? Bogleheads' analysis finds the tIRA to HSA transfer falling in the category of "just because you can do it doesn't mean that you should" for most cases.

Here's what the Boglehead's wiki on Health Savings Accounts says about the tIRA -> HSA maneuver:
You can make a once in a lifetime rollover or transfer from an IRA to an HSA up to the annual HSA funding limit. This is usually not advised since you would lose the ability to contribute and take an HSA tax deduction for the amount you transfer, but it can be an emergency source of funds without paying taxes or penalties.
There was a recent (last couple of months, I think?) thread where this maneuver and its tax math was thoroughly presented and discussed, but, unfortunately, I can't get google or the bogleheads' advanced search to turn it up for me.
Our company already offers and HSA so I am good to go there. Moving money directly from a tax advantaged IRA would save me a small bit on taxes.
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Re: [Fidelity Health Savings Accounts Mega-Thread]-QUERY

Post by Spirit Rider » Wed Jan 22, 2020 11:26 am

Third Son wrote:
Wed Jan 22, 2020 8:00 am
I am set to retire on Feb 29th 2020. All of my investment assets are with Fidelity (IRA, Roth IRA). In retirement, I will be in a HDHCP and as such, I believe I am eligible to contribute to an HSA.

I opened an HSA account at Fidelity this morning but have not yet funded it since my HDHCP starts March 1, 2020. From my reading, would it be valid to move some of my pre-tax IRA money to the Fidelity HSA after March 1st? I see it is a one-time event so I want to make sure I hit the max contribution.

I assume this would count as income (taxable event) that I could deduct from my income tax? Not sure about this.
To summarize the points already made and some additional points:
  • If you have not had an HSA account before or there has been $0 in any HSA account for 18 months as of 3/1/20. You should make at least a $1 contribution to your Fidelity HSA account no later than 2/28/20. 3/1/20 is a Sunday and you would not be able to fund until 3/2/20
  • As pointed out, you can not reimburse for qualified medical expenses prior to the establishment date of the HSA. As also pointed out, for Fidelity and almost all other HSA custodians, that is only after you fund the account.
  • You can make the full $7100 HSA Contribution limit this year under the last-month rule. If you fail to be an HSA eligible individual for all of next year (2021), the pro-rated two months of extra contributions will be subject to a 10% excise tax penalty.
  • As has also been pointed out, you should almost never use distributions from a traditional IRA or any other tax-advantaged account to make HSA contributions unless you have no other sources of money to make those contributions. You are giving up the benefit of receiving a deduction for the HSA contribution.
  • If you use an IRA funding distribution (never do this if you are >= age 59 1/2). It is reported as a non-taxable rollover and you receive no HSA tax deduction. It will be subject to a one-year testing period and the entire amount will be subject to a 10% excise tax penalty if you do not remain an HSA eligible individual for for the entire testing period.
  • If you take a distribution of pre-tax accounts it will be taxable, but offset by the HSA deduction.
  • As has also been pointed out, have derived no net tax benefit from either of the above HSA contributions and have lost the opportunity to expand your tax-advantaged space.
  • As has also been pointed out, make sure this is in fact an HSA eligible HDHP. Not all high deductible health plans are HSA eligible.
Bottom lines:
  • Using your IRA to fund your HSA contribution is usually a very bad idea, unless you have no other income and/or non-tax advantaged assets to make the HSA contribution.
  • You do not need to wait until 2021 to make the full HSA contribution limit if you are reasonably sure you will be HSA eligible for all of 2021. Even if you are not it will only be a 10% penalty on (2/12 * $7100 ~= $1183) ~= $118.

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Re: [Fidelity Health Savings Accounts Mega-Thread]-QUERY

Post by Third Son » Wed Jan 22, 2020 11:59 am

Spirit Rider wrote:
Wed Jan 22, 2020 11:26 am
Third Son wrote:
Wed Jan 22, 2020 8:00 am
I am set to retire on Feb 29th 2020. All of my investment assets are with Fidelity (IRA, Roth IRA). In retirement, I will be in a HDHCP and as such, I believe I am eligible to contribute to an HSA.

I opened an HSA account at Fidelity this morning but have not yet funded it since my HDHCP starts March 1, 2020. From my reading, would it be valid to move some of my pre-tax IRA money to the Fidelity HSA after March 1st? I see it is a one-time event so I want to make sure I hit the max contribution.

I assume this would count as income (taxable event) that I could deduct from my income tax? Not sure about this.
To summarize the points already made and some additional points:
  • If you have not had an HSA account before or there has been $0 in any HSA account for 18 months as of 3/1/20. You should make at least a $1 contribution to your Fidelity HSA account no later than 2/28/20. 3/1/20 is a Sunday and you would not be able to fund until 3/2/20
  • As pointed out, you can not reimburse for qualified medical expenses prior to the establishment date of the HSA. As also pointed out, for Fidelity and almost all other HSA custodians, that is only after you fund the account.
  • You can make the full $7100 HSA Contribution limit this year under the last-month rule. If you fail to be an HSA eligible individual for all of next year (2021), the pro-rated two months of extra contributions will be subject to a 10% excise tax penalty.
  • As has also been pointed out, you should almost never use distributions from a traditional IRA or any other tax-advantaged account to make HSA contributions unless you have no other sources of money to make those contributions. You are giving up the benefit of receiving a deduction for the HSA contribution.
  • If you use an IRA funding distribution (never do this if you are >= age 59 1/2). It is reported as a non-taxable rollover and you receive no HSA tax deduction. It will be subject to a one-year testing period and the entire amount will be subject to a 10% excise tax penalty if you do not remain an HSA eligible individual for for the entire testing period.
  • If you take a distribution of pre-tax accounts it will be taxable, but offset by the HSA deduction.
  • As has also been pointed out, have derived no net tax benefit from either of the above HSA contributions and have lost the opportunity to expand your tax-advantaged space.
  • As has also been pointed out, make sure this is in fact an HSA eligible HDHP. Not all high deductible health plans are HSA eligible.
Bottom lines:
  • Using your IRA to fund your HSA contribution is usually a very bad idea, unless you have no other income and/or non-tax advantaged assets to make the HSA contribution.
  • You do not need to wait until 2021 to make the full HSA contribution limit if you are reasonably sure you will be HSA eligible for all of 2021. Even if you are not it will only be a 10% penalty on (2/12 * $7100 ~= $1183) ~= $118.
Thanks for your pointed discussion 8-) . I really don't expect to be using the HSA this year much, if at all. I read the last month rule (yeah that is not straightforward):

Limit on Contributions (continued)

If the taxpayer was not an eligible individual for the entire year or changed his or her coverage during the year, the contribution limit is:

Last-month rule allows eligible individuals to make a full contribution for the year even if they were not an eligible individual for the entire year. They can make the full contribution for the year if:
They are eligible individuals on the first day of last month of their taxable year HUH????. For most people this would be December 1, and
They remain eligible individuals during the testing period. The testing period runs from December 1 of the current year through December 31 of the following year (for calendar taxpayers).
If the taxpayer does not qualify to contribute the full amount for the year, the contribution is determined by using the sum of the monthly contribution limits rule.

OR

Sum of the monthly contribution limits rule (use Limitation Chart and Worksheet in Form 8889 Instructions). This is the amount determined separately for each month based on eligibility and HDHP coverage on the first day of each month plus catch-up contributions. For this purpose, the monthly limit is 1/12 of the annual contribution limit, as calculated on the Limitation Chart and worksheet.



I should mention also that I have the last few paychecks from this year going directly into my Roth IRA so I have no "pre-tax" money to contribute I might have some in 401K money that I have not rolled over yet...

It just makes sense to me to take a small amount of "pre-tax" money from my IRA and put it in an HSA. From what I understand, I will not be subject to tax on that money or on it's gains if invested.

Taking cash and injecting it directly into the HSA also makes sense since I would be able to deduct that from my taxes and have a better tax efficiency.

I sensed some frustration in your post to me. Sorry for my ignorance but I am new to all of this. Thank you for your time in responding.
Last edited by Third Son on Wed Jan 22, 2020 1:26 pm, edited 2 times in total.
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Re: [Fidelity Health Savings Accounts Mega-Thread]-QUERY

Post by jeffyscott » Wed Jan 22, 2020 12:06 pm

Spirit Rider wrote:
Wed Jan 22, 2020 11:26 am
  • As has also been pointed out, you should almost never use distributions from a traditional IRA or any other tax-advantaged account to make HSA contributions unless you have no other sources of money to make those contributions. You are giving up the benefit of receiving a deduction for the HSA contribution.
  • If you use an IRA funding distribution (never do this if you are >= age 59 1/2). It is reported as a non-taxable rollover and you receive no HSA tax deduction. It will be subject to a one-year testing period and the entire amount will be subject to a 10% excise tax penalty if you do not remain an HSA eligible individual for for the entire testing period.
  • If you take a distribution of pre-tax accounts it will be taxable, but offset by the HSA deduction.
  • As has also been pointed out, have derived no net tax benefit from either of the above HSA contributions and have lost the opportunity to expand your tax-advantaged space.
Regarding those points, for a retiree who is making withdrawals from TIRA or equivalent, I see funding the HSA as essentially a tax-free Roth conversion. For example, I am doing Roth conversions to the top of the 12% tax bracket, putting $9100 in HSAs for myself and spouse allows us to withdraw an additional $9100 within the 12% bracket. That $9100 is then in the HSA, which essentially functions like a Roth that is limited to being used for medical expenses.

If under 59.5, then the one time rollover from TIRA to HSA is essentially doing the same thing, a tax-free Roth conversion. This may make sense, assuming one does not have any other way of funding the HSA.

In both cases the net effect is an additional $9100 in the HSA, but no taxes are paid on the TIRA withdrawal used to fund this.
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Re: [Fidelity Health Savings Accounts Mega-Thread]-QUERY

Post by Third Son » Wed Jan 22, 2020 12:14 pm

jeffyscott wrote:
Wed Jan 22, 2020 12:06 pm
Spirit Rider wrote:
Wed Jan 22, 2020 11:26 am
  • As has also been pointed out, you should almost never use distributions from a traditional IRA or any other tax-advantaged account to make HSA contributions unless you have no other sources of money to make those contributions. You are giving up the benefit of receiving a deduction for the HSA contribution.
  • If you use an IRA funding distribution (never do this if you are >= age 59 1/2). It is reported as a non-taxable rollover and you receive no HSA tax deduction. It will be subject to a one-year testing period and the entire amount will be subject to a 10% excise tax penalty if you do not remain an HSA eligible individual for for the entire testing period.
  • If you take a distribution of pre-tax accounts it will be taxable, but offset by the HSA deduction.
  • As has also been pointed out, have derived no net tax benefit from either of the above HSA contributions and have lost the opportunity to expand your tax-advantaged space.
Regarding those points, for a retiree who is making withdrawals from TIRA or equivalent, I see funding the HSA as essentially a tax-free Roth conversion. For example, I am doing Roth conversions to the top of the 12% tax bracket, putting $9100 in HSAs for myself and spouse allows us to withdraw an additional $9100 within the 12% bracket. That $9100 is then in the HSA, which essentially functions like a Roth that is limited to being used for medical expenses.

If under 59.5, then the one time rollover from TIRA to HSA is essentially doing the same thing, a tax-free Roth conversion. This may make sense, assuming one does not have any other way of funding the HSA.

In both cases the net effect is an additional $9100 in the HSA, but no taxes are paid on the TIRA withdrawal used to fund this.
Yes this is exactly what I was thinking. It doesn't need to be very complex. So I assume you are opening an HSA for your spouse as well and putting in some portion of the $8100 split between the two accounts, and then also putting in +$1000 in each?
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Re: [Fidelity Health Savings Accounts Mega-Thread]-QUERY

Post by Spirit Rider » Wed Jan 22, 2020 1:46 pm

jeffyscott wrote:
Wed Jan 22, 2020 12:06 pm
Regarding those points, for a retiree who is making withdrawals from TIRA or equivalent, I see funding the HSA as essentially a tax-free Roth conversion. For example, I am doing Roth conversions to the top of the 12% tax bracket, putting $9100 in HSAs for myself and spouse allows us to withdraw an additional $9100 within the 12% bracket. That $9100 is then in the HSA, which essentially functions like a Roth that is limited to being used for medical expenses.

If under 59.5, then the one time rollover from TIRA to HSA is essentially doing the same thing, a tax-free Roth conversion. This may make sense, assuming one does not have any other way of funding the HSA.

In both cases the net effect is an additional $9100 in the HSA, but no taxes are paid on the TIRA withdrawal used to fund this.
Yes, but you are missing the opportunity to expand your tax-advantaged accounts.

This is why I said "almost never". If you want to move pre-tax money to tax-free/likely tax-free money the taxes on a Roth conversion present a problem. E.g. You have only tax-advantaged money to pay the taxes on the conversion, the taxable income increases your ACA MAGI over the cliff, etc... This would be one of the exceptions. Otherwise my statement stands.

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Re: [Fidelity Health Savings Accounts Mega-Thread]-QUERY

Post by jeffyscott » Wed Jan 22, 2020 2:45 pm

Spirit Rider wrote:
Wed Jan 22, 2020 1:46 pm
jeffyscott wrote:
Wed Jan 22, 2020 12:06 pm
Regarding those points, for a retiree who is making withdrawals from TIRA or equivalent, I see funding the HSA as essentially a tax-free Roth conversion. For example, I am doing Roth conversions to the top of the 12% tax bracket, putting $9100 in HSAs for myself and spouse allows us to withdraw an additional $9100 within the 12% bracket. That $9100 is then in the HSA, which essentially functions like a Roth that is limited to being used for medical expenses.

If under 59.5, then the one time rollover from TIRA to HSA is essentially doing the same thing, a tax-free Roth conversion. This may make sense, assuming one does not have any other way of funding the HSA.

In both cases the net effect is an additional $9100 in the HSA, but no taxes are paid on the TIRA withdrawal used to fund this.
Yes, but you are missing the opportunity to expand your tax-advantaged accounts.

This is why I said "almost never". If you want to move pre-tax money to tax-free/likely tax-free money the taxes on a Roth conversion present a problem. E.g. You have only tax-advantaged money to pay the taxes on the conversion, the taxable income increases your ACA MAGI over the cliff, etc... This would be one of the exceptions. Otherwise my statement stands.
I don't see how I am missing any opportunity for me to expand tax deferred space?

Money is fungible, I have no wage income, so cannot contribute to an IRA. I can put money in the HSA and I can do Roth conversions. Since, for me, it makes sense to convert to the top of the 12% bracket, I do that. Since it makes sense to contribute to the HSA, I do that. The net effect is $9100 moves from TIRA to HSA.

I do have pension income, but that is ultimately immaterial to the above decisions and analysis, other than the pension income is part of the reason that converting as much as possible in 12% bracket makes sense for me.
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Re: [Fidelity Health Savings Accounts Mega-Thread]-QUERY

Post by jeffyscott » Wed Jan 22, 2020 2:47 pm

Third Son wrote:
Wed Jan 22, 2020 12:14 pm
jeffyscott wrote:
Wed Jan 22, 2020 12:06 pm
Spirit Rider wrote:
Wed Jan 22, 2020 11:26 am
  • As has also been pointed out, you should almost never use distributions from a traditional IRA or any other tax-advantaged account to make HSA contributions unless you have no other sources of money to make those contributions. You are giving up the benefit of receiving a deduction for the HSA contribution.
  • If you use an IRA funding distribution (never do this if you are >= age 59 1/2). It is reported as a non-taxable rollover and you receive no HSA tax deduction. It will be subject to a one-year testing period and the entire amount will be subject to a 10% excise tax penalty if you do not remain an HSA eligible individual for for the entire testing period.
  • If you take a distribution of pre-tax accounts it will be taxable, but offset by the HSA deduction.
  • As has also been pointed out, have derived no net tax benefit from either of the above HSA contributions and have lost the opportunity to expand your tax-advantaged space.
Regarding those points, for a retiree who is making withdrawals from TIRA or equivalent, I see funding the HSA as essentially a tax-free Roth conversion. For example, I am doing Roth conversions to the top of the 12% tax bracket, putting $9100 in HSAs for myself and spouse allows us to withdraw an additional $9100 within the 12% bracket. That $9100 is then in the HSA, which essentially functions like a Roth that is limited to being used for medical expenses.

If under 59.5, then the one time rollover from TIRA to HSA is essentially doing the same thing, a tax-free Roth conversion. This may make sense, assuming one does not have any other way of funding the HSA.

In both cases the net effect is an additional $9100 in the HSA, but no taxes are paid on the TIRA withdrawal used to fund this.
Yes this is exactly what I was thinking. It doesn't need to be very complex. So I assume you are opening an HSA for your spouse as well and putting in some portion of the $8100 split between the two accounts, and then also putting in +$1000 in each?
Yep, two HSAs in order to be able to put in the extra $1000.
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Re: [Fidelity Health Savings Accounts Mega-Thread]-QUERY

Post by tfb » Wed Jan 22, 2020 3:28 pm

jeffyscott wrote:
Wed Jan 22, 2020 2:45 pm
I don't see how I am missing any opportunity for me to expand tax deferred space?

Money is fungible, I have no wage income, so cannot contribute to an IRA. I can put money in the HSA and I can do Roth conversions. Since, for me, it makes sense to convert to the top of the 12% bracket, I do that. Since it makes sense to contribute to the HSA, I do that. The net effect is $9100 moves from TIRA to HSA.

I do have pension income, but that is ultimately immaterial to the above decisions and analysis, other than the pension income is part of the reason that converting as much as possible in 12% bracket makes sense for me.
When you convert to Roth or do the IRA-to-HSA transfer, the total amount in your IRA + HSA remains the same. When you simply contribute to the HSA from your pension income, the total amount in your IRA + HSA expands.

Suppose you normally would convert $30k. Now you are thinking converting $30k plus transferring $9k to HSA. $39k leaves TIRA and goes into Roth + HSA. If you convert $39k and contribute $9k to HSA out of your pension income, you will have $48k in Roth + HSA for paying the same amount in taxes.
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Re: [Fidelity Health Savings Accounts Mega-Thread]-QUERY

Post by jeffyscott » Wed Jan 22, 2020 4:59 pm

tfb wrote:
Wed Jan 22, 2020 3:28 pm
jeffyscott wrote:
Wed Jan 22, 2020 2:45 pm
I don't see how I am missing any opportunity for me to expand tax deferred space?

Money is fungible, I have no wage income, so cannot contribute to an IRA. I can put money in the HSA and I can do Roth conversions. Since, for me, it makes sense to convert to the top of the 12% bracket, I do that. Since it makes sense to contribute to the HSA, I do that. The net effect is $9100 moves from TIRA to HSA.

I do have pension income, but that is ultimately immaterial to the above decisions and analysis, other than the pension income is part of the reason that converting as much as possible in 12% bracket makes sense for me.
When you convert to Roth or do the IRA-to-HSA transfer, the total amount in your IRA + HSA remains the same. When you simply contribute to the HSA from your pension income, the total amount in your IRA + HSA expands.

Suppose you normally would convert $30k. Now you are thinking converting $30k plus transferring $9k to HSA. $39k leaves TIRA and goes into Roth + HSA. If you convert $39k and contribute $9k to HSA out of your pension income, you will have $48k in Roth + HSA for paying the same amount in taxes.
Maybe I am thinking of it wrong, because I have been confusing myself trying to figure out the net effect of my actual scenario :? .

With or without the HSA, I would convert until taxable income = $80,000 (the top of 0% cap gains bracket, not quite the top of 12% income tax bracket).

Let's say other income is $50,000. Without the HSA, I would convert/withdraw $54,800 because that would result in $80K taxable income.

If I put $9000 in the HSAs, I would convert/withdraw $63,800 in order to make taxable income $80,000.

Spending would determine how much is converted vs. withdrawn. If I am spending $50,000, then without the HSA the entire $54,800 is converted. With the HSA, if you think of the money coming from the $50K, that means I now only have $41K to spend and so, $9000 of the $63,800 is withdrawn and the conversion amount remains $54,800. I could just as well think of it as I am spending the $50K and then taking $9K from TIRA and moving it to HSA.
Hope that makes sense :beer .
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Re: [Fidelity Health Savings Account Mega-Thread]

Post by elvisimprsntr » Fri Jan 24, 2020 5:49 am

I inquired with Fidelity about individual HSA accounts ~4 years ago. At the time, their response was we only offer employer sponsored plans through Fidelity. I left it at that and invested my HSA funds in my employer sponsored HSA (PayFlex) plan with fee$. Fast forward, now you can open an individual HSA with Fidelity and perform Trustee-to-Trustee transfers without even having to pick up the phone or get up off the couch. I am sure I was not the only one who asked about individual HSAs, but I'd like to think I helped push Fidelity in that direction. You can all thank me later at the pub.

Excerpt from my other post. Sorry about the cross post, but just saw this mega thread.
If you have an employer sponsored HSA, automatic payroll deductions will lower your federal, SS, and medicare taxes. My employer also has a health incentive program, which they will contribute to my HSA.

If you have an outside HSA which you contribute to, you only get the federal deduction (even if you do not itemize)

I have both, but several times a year I transfer employer HSA funds to Fidelity HSA for better investment options and lower fees. Your employer HSA may charge a fee to move the funds. Mine says they will, but never do when I initiate it from Fidelity end. I pay my current minimal medical expenses out of taxable funds to let the HSA grow for future years when I will need it. I don't even carry the HSA debit cards in my wallet, which you can get one from Fidelity too.

Note: Contribution limits apply to total (employee and employer) contributions to all your HSA accounts.

manatee2005
Posts: 555
Joined: Wed Dec 18, 2019 9:17 pm

Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th

Post by manatee2005 » Wed Jan 29, 2020 2:57 am

jbmitt wrote:
Sun Nov 11, 2018 5:29 pm
I hope this is true. I’ll roll my HSA funds over from Optum. I’m all for having fewer accounts to keep track of.
Did you ever end up doing it?

Horsefly
Posts: 582
Joined: Sat Oct 24, 2015 8:13 am
Location: Colorado, mostly

Re: [Fidelity Health Savings Account Mega-Thread]

Post by Horsefly » Wed Jan 29, 2020 10:49 am

elvisimprsntr wrote:
Fri Jan 24, 2020 5:49 am
I inquired with Fidelity about individual HSA accounts ~4 years ago. At the time, their response was we only offer employer sponsored plans through Fidelity. I left it at that and invested my HSA funds in my employer sponsored HSA (PayFlex) plan with fee$. Fast forward, now you can open an individual HSA with Fidelity and perform Trustee-to-Trustee transfers without even having to pick up the phone or get up off the couch. I am sure I was not the only one who asked about individual HSAs, but I'd like to think I helped push Fidelity in that direction. You can all thank me later at the pub.
You'll have to share that beer with me, although my route was a bit different.

All my taxable, Roth, and traditional IRA funds are at Fidelity. In 2013 I contacted Fidelity and asked about an HSA, and got the same answer you did. They admitted they were considering makine HSAs available for individuals and not just as part of a corporate package. So, I opened up an HSA with HSA Administrators, and it was horrible. Then in Jan-2017 megacorp transitioned their 401K, retiree pension / savings, and most other stuff to Fidelity. Part of the package was access to a open an HSA at Fidelity for all employees and retirees. Of course I jumped on it. Obviously that was before Fidelity opened HSAs up for everyone. The move from HSA Administrators to Fidelity was like night and day.

manatee2005
Posts: 555
Joined: Wed Dec 18, 2019 9:17 pm

Re: [Fidelity Health Savings Account Mega-Thread]

Post by manatee2005 » Thu Jan 30, 2020 1:04 am

I just opened up Fidelity HSA and initiated partial transfer. It seriously took 2 minutes.

jbmitt
Posts: 461
Joined: Mon Jul 14, 2008 1:00 am

Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th

Post by jbmitt » Thu Jan 30, 2020 11:38 am

manatee2005 wrote:
Wed Jan 29, 2020 2:57 am
jbmitt wrote:
Sun Nov 11, 2018 5:29 pm
I hope this is true. I’ll roll my HSA funds over from Optum. I’m all for having fewer accounts to keep track of.
Did you ever end up doing it?
Yep. I rolled mine and my wife's accounts over. It was somewhat slow, but we use Fidelity for everything. I've been very happy with one less account out there.

manatee2005
Posts: 555
Joined: Wed Dec 18, 2019 9:17 pm

Re: Rumor mill - Fidelity starting individual HSA's Nov. 15th

Post by manatee2005 » Thu Jan 30, 2020 11:42 am

jbmitt wrote:
Thu Jan 30, 2020 11:38 am
manatee2005 wrote:
Wed Jan 29, 2020 2:57 am
jbmitt wrote:
Sun Nov 11, 2018 5:29 pm
I hope this is true. I’ll roll my HSA funds over from Optum. I’m all for having fewer accounts to keep track of.
Did you ever end up doing it?
Yep. I rolled mine and my wife's accounts over. It was somewhat slow, but we use Fidelity for everything. I've been very happy with one less account out there.
Thanks, I just created the account and kicked off the transfer last night. It says it will take 2 weeks.

engineerbme
Posts: 57
Joined: Tue Jun 04, 2019 10:12 am

Re: [Fidelity Health Savings Account Mega-Thread]

Post by engineerbme » Wed Feb 05, 2020 9:32 am

I tried searching and trying to answer my question but didn't have much success.

My employer uses HSA Bank exclusively to make my HSA contributions. At one point I was able to create an investment TdAmeritrade account through HSA Bank and then did a direct transfer over to my Fidelity HSA. This force closed my TdAmeritrade account, and effectively kept the HSA Bank account rolling.

Since I cannot change where the allocations and contributions go to every month, my HSA Bank continues to accumulate but I have no real understanding of how I can transfer these funds on a semi annual or quarterly, or whatever frequency basis over to my Fidelity HSA.

Could someone please ELI5 to me? Thank you!

Spirit Rider
Posts: 12610
Joined: Fri Mar 02, 2007 2:39 pm

Re: [Fidelity Health Savings Account Mega-Thread]

Post by Spirit Rider » Wed Feb 05, 2020 10:31 am

You can only do one free 60-day indirect HSA rollover per 12 month period.

You can do as many trustee -> trustee transfers as you want and HSA Bank allows. Many HSA custodians charge a $20-$25 fee for such transfers, some charge no fee. I do not know what HSA bank charges, but am sure many others do.

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