I recently transferred my health savings account to HSA Bank and was told if I maintain a $5000 daily balance there will be no fees on the banking side or the investment side with TD Ameritrade. The monthly fees would be $5.50 if I kept the entire amount invested. Is it worth avoiding the fees, or would it be better to keep it all invested?
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I have $5000 in cash and the rest in TD Ameritrade. Not a rational decision, I'll admit, as the opportunity cost of keeping that money on the sidelines is greater than the $5/mo... but I really don't like fees. I think about it like part of my "health care" emergency fund, which is exactly what it's supposed to be!
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I will probably pay the fees when the balance of my HSA increases enough to make the overall expense ratio more palatable.
For example, suppose there I keep $100 in the cash account and the rest in TD Ameritrade index funds. Here are the overall account expense ratios for account totals:
cash
investment portion
total
annual fee
ER
100
6650
6750
60
0.89%
100
13400
13500
60
0.44%
100
20150
20250
60
0.30%
100
26900
27000
60
0.22%
100
33650
33750
60
0.18%
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I will probably pay the fees when the balance of my HSA increases enough to make the overall expense ratio more palatable.
For example, suppose there I keep $100 in the cash account and the rest in TD Ameritrade index funds. Here are the overall account expense ratios for account totals:
cash
investment portion
total
annual fee
ER
100
6650
6750
60
0.89%
100
13400
13500
60
0.44%
100
20150
20250
60
0.30%
100
26900
27000
60
0.22%
100
33650
33750
60
0.18%
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Wrong way to look at it. It's really just the first $5K you care about. So $5.50 a month x 12 months = $66 a year. So $66 out of $5000, or a little more than 1%. The account pays like 0.5%. So if your return is 2%+ investing, you're coming out ahead. Seems a pretty easy bet to make.Helping those who wear the white coat get a fair shake on Wall Street since 2011
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If you use your HSA debit card to pay for health expenses, do you need to have that amount available in cash or will it automatically draw down your investment account?
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It needs to be in cash. They won't even pull the amount for the fees from TD Ameritrade. When I got behind on fees they sent me a letter about it so I had to transfer a few bucks to HSA Bank from TD Ameritrade.Helping those who wear the white coat get a fair shake on Wall Street since 2011
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I'm looking at my HSA account as just another vehicle for retirement. I'm not planning on actually using the money to pay for medical expenses - I'll pay those expenses out of pocket. It does seem that paying the annual expenses and keeping the majority of the money invested will provide for better long term returns.
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I’m looking at my HSA account as just another vehicle for retirement. I’m not planning on actually using the money to pay for medical expenses – I’ll pay those expenses out of pocket. It does seem that paying the annual expenses and keeping the majority of the money invested will provide for better long term returns.
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Not true. You are probably better off spending it on health care now than on a sailboat at age 65. It's only triple tax free if spent on health care.Helping those who wear the white coat get a fair shake on Wall Street since 2011
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Well as long as you have receipts for medical things you can offset those later no matter how you actually spent it. Im saving it until later, it will take a massive shift somewhere for there not to be enough HC dollar demand to use it after retirement.
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True. I meant to clarify - not to spend on CURRENT medical expenses - I'll pay those expenses out of pocket. I'm sure I'll have plenty of medical expenses in retirement to gain the triple tax free benefit. And like Zaphod said, I can always hold onto medical receipts as I near retirement.
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