My New HSA Strategy – Rollovers and Trustee Transfers

My New HSA Strategy - Rollovers and Trustee TransfersSince my company was acquired by an even larger one last year, 2013 will be our first full year under the new administration.  That means a whole lot of changes to our benefits and one of those will be to our HSA provider.  Although the HDHP insurance portion will still be served by Aetna, our HSA provider will be switching from Fidelity to Chase.  Chase is similar in respect to Fidelity but their investing options are more expensive and more limited.  And since I don’t rely on my HSA for medical expenses, low cost/low fee investment options are very important to me.

If you’re not familiar with what an HSA isit’s the only investment that allows for triple tax savings: the money you put in isn’t taxed, your earnings aren’t taxed, and the money you take out isn’t taxed.  I think the HSA is a no-brainer for anyone who’s young and healthy and it probably even makes sense if you’re not.  An HSA must be paired with a HDHP in order to contribute, but after that, it’s yours to keep for the rest of your life.  

My Fidelity HSA

Currently, I have about $10k invested in TIPS in my Fidelity HSA(TIPS earnings aren’t taxed locally and CA is one of the few states that does not recognize an HSA yet).  Fidelity charges me $12 a quarter just to hold my HSA and $10 for every investment trade I make.  $48 a year in fees plus 1 trade a year at $10 = $58.  $58/$10,000 means I’m paying at least .58% in fees every year, which isn’t horrible but it will make a big difference over the long run.  I’ve been stuck with Fidelity for three years, since in order to get my company contribution and save on FICA taxes, my HSA contributions must be made through my employer’s plan.

My New Chase HSA

My new Chase HSA has no account maintenance fees but if I want to open an investment account, there is a $2.50 monthly charge and trades are $10 each.  My ER on $10,000 in assets would be .4% per year plus any additional fees built into the funds I invest in.  Chase only offers 10 index funds that all come with high ER’s(> .5%), so my effective fee would be 1% a year or maybe even higher.  As soon as I saw that, I knew I had to find a better option.

What’s the Simplest Solution?

Here’s what I decided to do.  I took $10,000 from Fidelity and did a trustee to trustee rollover to HSA Bank where they have no fees as long as you hold $3,000 in a savings account.  If you’d like to make investments, you need to hold $5,000 in your savings account(leaving me only $5,000 to invest).  There’s no fee on Fidelity’s side or HSA Bank’s side for doing this but if your bank does try to charge you a fee, you can do a self rollover(but only once every 12 months).  In order to use this method, you would need to write a check from your old HSA to your new HSA provider.  Then, all you’d have to do is report it as a ‘rollover contribution’ on your taxes on form 5498-SA, Box 4(Thanks TFB!)

No Fees Please

The best thing about HSA bank is that I won’t pay any fees as long as I stay above the designated 3k or 5k thresholds.  As for the investment side, you can actually link your HSA Bank account to an investment account with TD-Ameritrade where they offer over 100 free, no fee ETF’s.  That way, I can buy and sell Vanguard ETF’s for free and pay very low expense ratios on those funds.  If you don’t have that much money saved up, it would probably make more sense to go with a credit union HSA since they usually offer competitive CD rates with low minimums.

Using this strategy, I won’t pay a single fee, even with two accounts.  I’ll always have to contribute to my Chase HSA but at the end of each year I can do a trustee to trustee rollover for free.  These types of rollovers are unlimited where as if I used the other method of writing a check, I could only do that once every 12 months.  Should either bank start charging a fee, I still have a few options to self rollover my money though:

  • Write a check(but you may have to pay for a checkbook) and send it to HSA Bank
  • Pull money out from the ATM using my free debit card(Chase ATM’s would be free) and then write a personal check to HSA Bank.
  • Try to withdraw money from a teller at Chase bank for free and then write a personal check to HSA Bank.
  • Direct transfer from my Chase HSA to my personal checking account and then write a check to HSA Bank

I think I got kind of lucky since Fidelity, HSA Bank and Chase all don’t charge fees to do trustee to trustee rollovers(which are unlimited btw).  This is very uncommon, but should any of them change their mind in the future I can use any of the tips listed above to avoid having to pay fees.

I seriously hate paying fees so I had a ton of fun researching ways in which I could avoid them.  I think my solution worked out pretty well since it allows me to rollover my money at the end of each year into my HSA Bank account where I can invest in some great low cost and no fee ETF’s with TD-Ameritrade and I never have to pay another dime in fees to Fidelity.

Readers, have you signed up for an HSA yet?  Have you had to rollover your HSA or did you even know it was possible to do this?

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-Harry @ PF Pro

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Hi, I'm Harry, the owner and head writer for Your PF Pro. I started this site back in 2011 in order to create a place where young professionals could come and get all of their financial questions answered. On the site, you'll find articles on everything from asset allocation for retirement to saving money at Chipotle! So enjoy..


  1. says

    That’s pretty awesome! I don’t have enough in my HSA yet to justify rolling it over. I might contribute more next year but I did a decent amount this year… the reason I didn’t do more is b/c the investment options suck at my HSA bank my company uses. All very high fees.

  2. says

    I recently had to restructure my companies health insurance plan but we didn’t go to an HSA and high deductible plan. I kind of like the idea of an HSA but the problem is most of my workers don’t like about it the high deductibles. Great article Harry.

    • says

      I know what you mean. It’s obviously cheaper for the employer but a lot of employees don’t realize the benefits you can get. I think it also rewards employers who promote health and well being. It’s in everyone’s best interests to shop around for health care and stay healthy.

      I don’t see why anyone would not want to max out their HSA since it has the best tax treatment out of any retirement account and if you end up not using it for medical expenses you can use it like a traditional IRA! Check out my analysis here to see what I mean:

  3. says

    There needs to be more good HSA options! It doesn’t help, I guess, that most people have low balances in their HSAs. I’m curious to see what my health insurance options look like for the next plan year (we haven’t had open enrollment yet) as to whether or not the HDHP plan will make more sense for me than the CDHP I’ve used for the last few years. Supposedly birth control is going to be free going forward, but I’m not sure if I trust that without firsthand knowledge and if it isn’t, the CDHP is far cheaper for me than a HDHP.

    Thanks for your posts on HSAs; they have been really helpful for me to prepare my strategy for when I have one. I think I would probably transfer the money out to a credit union HSA for the first few years, until there was a decent enough sized balance for it to be worth investing. Making payroll contributions would really only help with the Medicare tax since I’m far over the Social Security Tax cutoff.

    • says

      Yea I know what you mean, the HSA is relatively new so it’s only going to get better from here. And your point about the birth control is what makes the HSA so great. It allows you to shop around for whatever service you need instead of paying an insurance company to do it for you(all they do is pass the cost onto you).

      Your plan sounds perfect, that’s exactly what I usually recommend to people. Check out the link I posted above in reply to Chris’ comment. Btw, that is a good problem to have, being over the SS cutoff haha :)

  4. says

    This looks to be a pretty sweet deal! We’re in the process of trying to find a place to have a HSA and fund it, but am running into fee issues as I do not want to pay any unneeded fees. I’ll probably be looking to invest it as well, so thanks for the tips.

    • says

      Since most people don’t have a ton of money in their HSA’s yet, I think that’s why so many banks charge fees. But there’s definitely a few out there that won’t charge you anything.

      At a bare minimum, you could invest in a bond or TIPS fund to avoid state taxes if that applies. I’m going to start getting a little more aggressive with my HSA and start treating it as part of my retirement portfolio.

  5. says

    We have a no fee HSA with Forum Credit Union. I didn’t use the one tied to my healthcare plan and just decided to get my own seperate HSA…for several reasons. I can still make contributions via payroll though so that’s good. I just have to fill out a form every time =/

    • says

      Oh nice, that is pretty smart of you. Is the form a hassle to fill out every time(I’m assuming that means 26 times a year). Let’s say I conservatively assume you’re maxing out the family contribution and getting 2% a year in interest payments, then you’re making $60 a year by doing it your way over mine(rollover).

      That’s probably worth it but if your contributing less and getting less in interest it might not be worth the hassle of having to fill out the form every time. Plug your numbers into this spreadsheet and see :)

  6. says

    My employer also offers an HSA with their HDHP and contributes an amount equal to my annual deductible to it. I don’t spend rolls over each year, and in a few years I would have enough to cover an annual out of pocket maximum. Plus my premiums are lower with the HDHP vs. a PPO. So it makes a lot of sense for me.

    @ Harry,

    Would you please give idea regarding Chase when it comes to health insurance.??

    • says

      Chase is only a HSA provider, they do not offer any type of insurance. They simply hold your account for you, allow you to invest, etc(my HDHP provider is Aetna). But as far as Chase goes, they are a good HSA provider, but not great. I think there is a monthly account fee that’s waived by employer(they pay for it) but they charge $2.50 a month to invest and they don’t have very good options on their investment side(limited choices and high fees). That’s why I rolled my account over to HSA Bank, where I can keep 5k in savings, and invest the rest in no fee ETF’s with TD-Ameritrade and never pay a single fee. Does that answer your question?

  7. Jon says

    Something else to consider for married couples out there with family HDHPs: each spouse can have their own HSA. Contributions can be split in any way the couple deems reasonable up to the maximum annual family HSA contribution amount. Or you can contribute 100% of the max contribution amount into a single HSA. Medical expenses can be paid for either spouse via either HSA account. HSA accounts are owned by individuals. In case of death, HSAs are transferred directly to spouses tax free, or to non-spouse beneficiaries the earnings would be taxed (but not penalized) I believe.

    If you are a married couple over 55, you can make a $1000 annual catch-up HSA contribution to each individual’s HSA. This is a case where it always makes sense to have separate HSAs….you can do payroll deduction in the max HSA contribution amount + $1000 catch-up contribution to the working spouse’s HSA, and you can make a $1000 catch-up contribution to the other spouse’s HSA.

    • says

      Thanks for sharing that Jon, I didn’t know that. It sounds like this strategy would be very beneficial in the example you describe where you’re (both?) over 55, but I can’t think of any other ways it would benefit those of us under 55 since the contribution limits are the same no matter how many HSA’s you have. Is that right or am I missing something?

  8. Blake says

    Harry, thanks for the info. Very interested to follow a similar plan since my company has Chase HSA. However, I’m not clear on how you do the trustee-to-trustee rollover at year end? I looked in the forms, but only saw options to rollover *INTO* Chase vs. *FROM* Chase. Any advice would be appreciated.

    • says

      Hey Blake, so what you would want to do is a trustee to trustee rollover from Chase to your personal HSA account(which you would have to open with someone like HSA Bank). You can do a trustee to trustee rollover as many times as you want, even in the same year. But the distinction is you need your TO bank to request it from your FROM bank.

      So in your case, you’ll want to go to HSA Bank and fill out their rollover form: Once you fill it out, send it to HSA Bank, they will make the request to Chase, and then you’ll have your Chase money rolled over to your account with HSA Bank.

      It was pretty easy when I did Fidelity to HSA Bank and in a month I’m going to do Chase to HSA Bank since I’m leaving my company, will let you know how it goes.

  9. Blake says

    Want to add another comment that challenges your thinking a bit. I agree that avoiding fees is nice, but the $3k and $5k thresholds mean your money is tied up and just sitting there. Maybe it’s earning some interest, but my guess is not much.

    In theory, if you invested that money instead, it seems you’re more likely to cover any potential monthly admin fees you’d incur. For Chase, I get charged a $3 monthly admin fee on the cash account and $2.50 for the investment. Seems like I could easily make that up from investing vs. letting a big chunk of cash sit there earning <0.3%?

    Maybe if you're doing a lot of trades or something it's worthwhile.

    • says

      Blake, that’s a very good point. In this case, I got so obsessed with avoiding fees that I forgot about the opportunity cost of that $5,000. Now, in this ultra-low interest rate environment I don’t think it makes a huge difference, but 1% of $5,000 is still $50 so it’s something to consider. So I’m essentially paying $50 so that I can invest the other money I have in low ER Vanguard funds for free using TD Ameritrade(no fee ETF option).

      In fact, for low account balances, this strategy probably doesn’t make much sense(transferring to HSA Bank for investing purposes), but as your account grows and you invest it in a riskier asset like stocks, your returns will get better and better and the opportunity cost of that 5k not being invested will diminish. My company waives the fees on Chase HSA but you also have to look at the expense ratio(ER) of the funds you’re allowed to invest in. If they’re the same funds as what are in my plan, the ER’s are on the high side(~.5% range).

  10. valley_nomad says

    HSA Bank will increase their minimum balance for waiving $2.50 Saving Account fee to $4850, starting from 9/1/2013. This will be also the minimum balance requirement for waiving $3.00 Investment fee.

    • says

      Wow, that sucks. I’ve honestly been thinking about switching from HSA bank anyways because I still haven’t decided what to invest my money in. I’m not sure if I want to hold it in my overall AA or do something different, or what..too many options haha. I’ll be exploring where to move it though and be sure to let everyone know!

  11. ippo says

    hi. so what HSA plan administrator do you recommend if you have less than the usual 5k min acct balance? I don’t want to get hit with monthly fees like at HSA bank. in ca and looking to rollover 4k former employer account. thanks!

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