HSA Bank eliminating investment options

[lawrenc3]

I thought I would update my HSA Bank/Schwab transfer to Fidelity.
I opened an HSA Fidelity account and had Fidelity transfer the assets in kind from the Schwab account under HSA Bank.
Surprisingly enough, this was fairly smooth given the advice I received on this thread (thank you) and having ignored HSA Bank telling me to liquidate first.
I then initiated a move of some cash from the HSA Bank to my HSA at Fidelity. This also was initiated from the Fidelity side.
Before initiating this request, I went through Fidelity's process of linking the HSA Bank account to my Fidelity account.
HSA Bank shows they have debited the cash amount I requested from my account, but it has not shown up at Fidelity yet.
I suspect it will show up in a week or two. (As this is a small amount, it is not giving me heartburn).
This process was all completed during the month of August.
I think that perhaps my linking the two accounts prior to my transfer request it has made it easier for HSA Bank to validate the tranfer request.
I do believe the HSA Bank employees may be facing a deluge of requests and it is causing backlogs.
I plan on keeping the HSA Bank account open to receive my employer contributions.

Just FYI if you link your HSA Bank account as a checking/savings account and do an ACH transfer it will get reported as a distribution by HSA Bank when tax time comes. You might be covered under the 60-day rollover rule, but you will need to verify this and fill out form 8889 correctly. Notably, you can only do 1 60-day rollover per year.

Doing a custodian-to-custodian transfer is the more proper way to avoid complicating taxes (and being constrained by the 60-day rollover rule)

[Trapper]

Yes, initially it appeared as it would be characterized as a distribution, but I called Fidelity and after speaking with them they changed it to a custodian to custodian transfer.
I suspect that is the reason for the delay for the money showing up in my Fidelity account. It is being sent in a check to Fidelity by mail.
We will see what happens.

[AnonJohn]

I thought I would update my HSA Bank/Schwab transfer to Fidelity.
I opened an HSA Fidelity account and had Fidelity transfer the assets in kind from the Schwab account under HSA Bank.
Surprisingly enough, this was fairly smooth given the advice I received on this thread (thank you) and having ignored HSA Bank telling me to liquidate first.
I then initiated a move of some cash from the HSA Bank to my HSA at Fidelity. This also was initiated from the Fidelity side.
Before initiating this request, I went through Fidelity's process of linking the HSA Bank account to my Fidelity account.
HSA Bank shows they have debited the cash amount I requested from my account, but it has not shown up at Fidelity yet.
I suspect it will show up in a week or two. (As this is a small amount, it is not giving me heartburn).
This process was all completed during the month of August.
I think that perhaps my linking the two accounts prior to my transfer request it has made it easier for HSA Bank to validate the tranfer request.
I do believe the HSA Bank employees may be facing a deluge of requests and it is causing backlogs.
I plan on keeping the HSA Bank account open to receive my employer contributions.

Just FYI if you link your HSA Bank account as a checking/savings account and do an ACH transfer it will get reported as a distribution by HSA Bank when tax time comes. You might be covered under the 60-day rollover rule, but you will need to verify this and fill out form 8889 correctly. Notably, you can only do 1 60-day rollover per year.

Doing a custodian-to-custodian transfer is the more proper way to avoid complicating taxes (and being constrained by the 60-day rollover rule)

Thanks. I'm unsure whether I did custodian-to-custodian (my intent). I initiated it Fidelity. Fidelity logged it as a "Transfer of Assets" (good). HSA Bank, however, lists it as a "Transfer Distribution". I guess I'll see at tax time next year and hold off doing another transfer this calendar year. Fingers crossed!

Incidentally, it took about a month and HSA Bank sent a check. Sharing in case it is useful to others. Finding it crazy that HSA Bank is caught in a storm of their own making ...

[TheAccountant]

https://www.finra.org/investors/need-he ... -complaint

Might be what needs to happen to get sleazy HSA Bank to stop playing games.

[tsupersonic]

Hopefully quick questions . I'm not a fan of these changes, but I also don't want to take the effort to move to a different HSA provider. I have much of my HSA Bank invested in Schwab (previously TDA). I want to keep these assets in Schwab, but can I direct new contributions to HSA Bank investment? I understand I can't buy anything new in Schwab, but I just want to keep those investments in Schwab. Also, does anyone know how dividends in Schwab work? Would DRIP continue to work, or would the dividend amount transfer back to HSA Bank?

[tj]

Hopefully quick questions . I'm not a fan of these changes, but I also don't want to take the effort to move to a different HSA provider. I have much of my HSA Bank invested in Schwab (previously TDA). I want to keep these assets in Schwab, but can I direct new contributions to HSA Bank investment? I understand I can't buy anything new in Schwab, but I just want to keep those investments in Schwab. Also, does anyone know how dividends in Schwab work? Would DRIP continue to work, or would the dividend amount transfer back to HSA Bank?

Nobody knows yet. A lot of people have transferred out of Schwab. Report back what you find out with your dividend after the cut off date.

It seems crazy to me that they would disable dividend reinvestment, but perhaps they would.

[dwalen]

Hopefully quick questions . I'm not a fan of these changes, but I also don't want to take the effort to move to a different HSA provider. I have much of my HSA Bank invested in Schwab (previously TDA). I want to keep these assets in Schwab, but can I direct new contributions to HSA Bank investment? I understand I can't buy anything new in Schwab, but I just want to keep those investments in Schwab. Also, does anyone know how dividends in Schwab work? Would DRIP continue to work, or would the dividend amount transfer back to HSA Bank?

If you want to keep your assets in Schwab why don't you just open an account with Lively? (they support Schwab) I just went through the process and it was relatively painless and it took less than a week.

Note: If you go this route, just in case I would just export your lot details / take a screenshot of your cost basis before you initiate the in-kind transfer. That's the only hiccup I had, on my new Lively HSA account Schwab reported Cost basis as unknown, even though it came directly from Schwab, and on the old account my lot details is gone because I no longer hold any positions I reached out to Schwab and opened a cost basis update request.

[5TRVLRS]

FWIW - On Aug. 11, on Fidelity's end, I initiated a cash transfer from HSA Bank to Fidelity. Yesterday, I got the letter from Fidelity, saying "As of the date on this letter, your transfer from HSA BANK has not yet been completed. We've been unable to get any information about the status of your transfer from HSA BANK because of their policy to only release information to account owners."

I called HSA Bank and they claim never to have received the request. Who knows if they will ever receive and process it.

Fidelity told me they would be happy to send the request again. Candidly though, I don't have confidence in HSA Bank to be handling this transfer request on a recurring basis so for now I'll just keep my new Fidelity HSA account and go ahead and open up the Choice invest account via HSA Bank.

[Trapper]

My request through Fidelity to HSA Bank for a transfer of some cash to Fidelity has been received at Fidelity.
HSA Bank customer service could not tell be if the transfer was coded correctly as a custodian to custodian transfer.
HSA Bank website just shows withdrawal/transfer.
HSA Bank customer service repeatedly told be to check with Fidelity. Why HSA Bank doesn't have or can't tell this information for withdrawals is not reasonable with me.
So, I did call Fidelity and they courteously helped me, checked, and told me that it shows as a custodian to custodian transfer.
My loop is now complete for this thread.

[RJC]

My request through Fidelity to HSA Bank for a transfer of some cash to Fidelity has been received at Fidelity.
HSA Bank customer service could not tell be if the transfer was coded correctly as a custodian to custodian transfer.
HSA Bank website just shows withdrawal/transfer.
HSA Bank customer service repeatedly told be to check with Fidelity. Why HSA Bank doesn't have or can't tell this information for withdrawals is not reasonable with me.
So, I did call Fidelity and they courteously helped me, checked, and told me that it shows as a custodian to custodian transfer.
My loop is now complete for this thread.

How often will you be doing these transfers? I may limit myself to once a year after hearing all of these issues.

[Vanguard Fan Girl]

Ugh! After reading what was posted here - thank you! I decided to go with Fidelity for my HSA. I don't like the new fees (basically paying them for what I've doing with Schwab all along) and lack of transparency from HSA Bank. Moving the funds from HSA Bank has been a nightmare! Their website says that once you liquidate everything, and set up an account with a new provider, it will take 7 to 10 business days to transfer your funds. Okay - no big deal. It has been over three weeks and when I spoke with them this morning to see what the holdup was, they told me it might be 90 days! They are holding my $100,000 hostage for 90 days!

Be careful if you decide to stay with them, apparently what their website says is meaningless.

[Trapper]

My request through Fidelity to HSA Bank for a transfer of some cash to Fidelity has been received at Fidelity.
HSA Bank customer service could not tell be if the transfer was coded correctly as a custodian to custodian transfer.
HSA Bank website just shows withdrawal/transfer.
HSA Bank customer service repeatedly told be to check with Fidelity. Why HSA Bank doesn't have or can't tell this information for withdrawals is not reasonable with me.
So, I did call Fidelity and they courteously helped me, checked, and told me that it shows as a custodian to custodian transfer.
My loop is now complete for this thread.

How often will you be doing these transfers? I may limit myself to once a year after hearing all of these issues.

My plan is to directly fund my portion of contributions directly to Fidelity and start using the GEHA health care contribution to pay for medical/dental expenses during the year. If I remain without healthcare expenses I may do a transfer once per year.

[cpambt22]

I talked with HSA Bank while i was on chat with Fidelity. HSA Bank are "having issues with their fax" which is how Fidelity sends the forms.

I talked with Fidelity and requested them to mail the forms as suggested by HSA Bank.

Please contact HSA Bank to confirm the following as I do not want to be held responsible for the following information but:

HSA Bank mailing address : P.O. Box 939, Sheboygan, WI 53082
HSA Bank Email: hsaforms@hsabank.com

7 days to receive mail

7-10 day to process once mail received.

Fidelity will not email usually but the chat representative was able to resend the request via mail.

I hope this helps.

EDIT 1:

HSA Bank sent over instructions:

Verify that new HSA is opened with custodian.
Make sure form is fully completed as
instructed by new custodian including:
• Accountholder’s physical signature
(Required).
• Mailing address for new custodian
(Required).

Edit 2:
HSA Bank says that the physical signature requirement may not be needed if Fidelity sends it and doesn't require it. Fidelity doesn't require it. So that may be one thing that may not be required but it's TBD at the moment.

If the form is later required by HSA Bank, here's the fidelity form: https://www.fidelity.com/bin-public/060 ... csource=VA

You can sign and then attach it to the message center with a note written on the form to link it to the existing transfer. This option may be overkill and not needed but it's my Plan C to the current Plan B.

[MoneyOCD]

Hopefully quick questions . I'm not a fan of these changes, but I also don't want to take the effort to move to a different HSA provider. I have much of my HSA Bank invested in Schwab (previously TDA). I want to keep these assets in Schwab, but can I direct new contributions to HSA Bank investment? I understand I can't buy anything new in Schwab, but I just want to keep those investments in Schwab. Also, does anyone know how dividends in Schwab work? Would DRIP continue to work, or would the dividend amount transfer back to HSA Bank?

If you want to keep your assets in Schwab why don't you just open an account with Lively? (they support Schwab) I just went through the process and it was relatively painless and it took less than a week.

Note: If you go this route, just in case I would just export your lot details / take a screenshot of your cost basis before you initiate the in-kind transfer. That's the only hiccup I had, on my new Lively HSA account Schwab reported Cost basis as unknown, even though it came directly from Schwab, and on the old account my lot details is gone because I no longer hold any positions I reached out to Schwab and opened a cost basis update request.

Wondering why you even bother with cost basis in HSA account? It only needed to calculate capital gain/tax which is not applicable for HSA.

[cpambt22]

Hopefully quick questions . I'm not a fan of these changes, but I also don't want to take the effort to move to a different HSA provider. I have much of my HSA Bank invested in Schwab (previously TDA). I want to keep these assets in Schwab, but can I direct new contributions to HSA Bank investment? I understand I can't buy anything new in Schwab, but I just want to keep those investments in Schwab. Also, does anyone know how dividends in Schwab work? Would DRIP continue to work, or would the dividend amount transfer back to HSA Bank?

If you want to keep your assets in Schwab why don't you just open an account with Lively? (they support Schwab) I just went through the process and it was relatively painless and it took less than a week.

Note: If you go this route, just in case I would just export your lot details / take a screenshot of your cost basis before you initiate the in-kind transfer. That's the only hiccup I had, on my new Lively HSA account Schwab reported Cost basis as unknown, even though it came directly from Schwab, and on the old account my lot details is gone because I no longer hold any positions I reached out to Schwab and opened a cost basis update request.

Wondering why you even bother with cost basis in HSA account? It only needed to calculate capital gain/tax which is not applicable for HSA.

Cost basis is important if you live in a state that doesn't recognize HSAs. For example: if you live in CA, California doesn't recognize the tax free nature of HSAs and therefore cost basis is important for CA purposes as CA will tax you on capital gains...

[MoneyOCD]

Hopefully quick questions . I'm not a fan of these changes, but I also don't want to take the effort to move to a different HSA provider. I have much of my HSA Bank invested in Schwab (previously TDA). I want to keep these assets in Schwab, but can I direct new contributions to HSA Bank investment? I understand I can't buy anything new in Schwab, but I just want to keep those investments in Schwab. Also, does anyone know how dividends in Schwab work? Would DRIP continue to work, or would the dividend amount transfer back to HSA Bank?

If you want to keep your assets in Schwab why don't you just open an account with Lively? (they support Schwab) I just went through the process and it was relatively painless and it took less than a week.

Note: If you go this route, just in case I would just export your lot details / take a screenshot of your cost basis before you initiate the in-kind transfer. That's the only hiccup I had, on my new Lively HSA account Schwab reported Cost basis as unknown, even though it came directly from Schwab, and on the old account my lot details is gone because I no longer hold any positions I reached out to Schwab and opened a cost basis update request.

Wondering why you even bother with cost basis in HSA account? It only needed to calculate capital gain/tax which is not applicable for HSA.

Cost basis is important if you live in a state that doesn't recognize HSAs. For example: if you live in CA, California doesn't recognize the tax free nature of HSAs and therefore cost basis is important for CA purposes as CA will tax you on capital gains...

You are correct, I keep forgetting that there are 2 States that do not recognize tax advantage status of HSA. for those it yes, make sense to pay attention. For rest of us - unless you plan moving to CA or NJ - basis accuracy is mute point.

[grabiner]

Cost basis is important if you live in a state that doesn't recognize HSAs. For example: if you live in CA, California doesn't recognize the tax free nature of HSAs and therefore cost basis is important for CA purposes as CA will tax you on capital gains...

You are correct, I keep forgetting that there are 2 States that do not recognize tax advantage status of HSA. for those it yes, make sense to pay attention. For rest of us - unless you plan moving to CA or NJ - basis accuracy is mute point.

It can also be important if you file taxes in those states as a non-resident. I have earned income in CA in recent years, and my CA capital loss carryover is less than my federal capital loss carryover because I have sold some ETFs in my HSA. (CA doesn't tax capital gains on ETFs for nonresidents, but it uses your total income to determine what tax rate is applied to your CA-source income, so the capital loss carryover slightly reduces my CA tax and the dividends in the HSA slightly increase it.)

[MoneyOCD]

Anyone tried to move from HSAbank/Schwab to Lively/Schwab ?

I am in the process of it myself:
1. Opened account at Lively, was under review for couple hours and set up completed the same day
2. Logged in and opened Schwab account, it was under review for couple hours and completed the same day also.
Account showed up under my Schwab login with zero balance.
3. Contacted CSR in the chat, got form to use to submit "In-kind" transfer from Schwab to Schwab.

Now I am in the waiting mode as I have couple CDs mature by August 15th, do not want it to get tangled in the move.
Planning to submit form on 15th for one smaller HSA.
CSR said that move will take 2-3 weeks

Update:
8/15 - Submitted Form and last Schwab (HSA bank) statement through secure messaging at Lively.com, received confirmation same day
8/21- All positions showed up "as is" at Schwab (Lively) account. Excluding weekend it took 4 business days.

Very easy process, and all moved exactly as they have been in HSAB account, that Includes:
Partials shares of stocks and ETFs, CD and MM moved "as is" also, no fees

Lively.com account is not listing investment balance yet, I assume it will show up overnight and they have to charge $24 flat fee for the year.

Next step is to move cash balance from HSA Bank.

8/21 submitted transfer request online for trustee-to-trustee transfer, marked to do full balance transfer but keep HSA Bank account open (in hope to not get charged account closing fee and have access to all tax forms for 2024) Lively sent me e-mail with prefilled form to sign (through drobox) and now estimated completion date is 9/21.

Update:
8/28 HSA Bank posted that they sent whole cash balance to Lively by check. No any fees charged (as mentioned above I opted on the form to keep account open)

As of today check still did not reach Lively account.
Will report back when money will arrive.

Update:
9/6 cash balance arrived and posted to my Lively account. From the submission of the transfer request to completion it took 16 calendar days. Amount came in full, no any fees were deducted. Lively charged $24 for the full year of investments. I set up account to swipe everything above $0 to the Schwab.

Done with the smaller HSA account.
For those who are on the fence of dong the same - Lively's process was straight forward and painless for me.
Hope those who also did the same can confirm that.

Now will start on Monday transfer of the large one, will be submitting both transfers on the same day (cash and Schwab), if timelines will hold as before and no any roadblocks from HSA Bank (comments above are unsettling), we should be done with HSA Bank by end of the September.

[JD7]

My transfer to Fidelity completed without an issue. I was charged $25 and all my securities moved without needing to sell anything. It concerns me that it was so easy to move the account. No one called me or sent a letter. All I needed was an account number. Could someone steal my account like that?

[deltaneutral83]

My transfer to Fidelity completed without an issue. I was charged $25 and all my securities moved without needing to sell anything. It concerns me that it was so easy to move the account. No one called me or sent a letter. All I needed was an account number. Could someone steal my account like that?

Moving shares in kind should have never been difficult in the first place, I also told Schwab to put that $25 back in the account or I'll move every other account. The second firms can move 401k's in kind it will be a frenzy. It is nothing short of insane that moving a 401k can take 2 weeks where the market can easily tick up 5%.

[supertreat]

If you already have an HSA brokerage set up at Schwab through HSA Bank this process is very easy. I initiated the transfer through Fidelity and it was completed in about a week for $25. There is no need to liquidate. My health insurance plan requires I have an HSA bank account as that's where the employer contributions go so I have to keep that open. I'm wondering why people are liquidating and/or dealing with HSA bank to transfer their HSA brokerage?

[investor4life]

Two of the Schwab funds in my HSA transferred in-kind to Fidelity (took 3 days and $25). Unfortunately, the third fund (SWVXX) did not as this is Schwab's in-house money market fund and cannot be held at Fidelity. So I will have to liquidate it and do a second transfer (and likely another $25 )