Dump HSA funds and start over

[pulpsnatcher]

My wife and I will soon be taking the WCI Fire your Financial Advisor course ~ so please take that into consideration.  I understand that I have not created a written financial plan but have been a diligent saver and investor (with a financial advisor) for decades.  So this question may be the cart before the horse type thing.....I have a Health Equity HSA and I have some poor performers in my account.  I am nearing retirement, financial independent (despite using a AUM advisor) and do not use this account for medical expenses.

Investment and cash total $81,000.   Investments as follows:

MFS  International  MINGX R3             $ 14,393

Pimco International Bond PFOAX         $   8, 051

Vanguard Wellesley Income Admiral    $   7, 900

Vanguard Total Intl Bond Index           $   7,820

Health Equity upcharges the selection of Vanguard Funds by .033% per month on average balance.  Does this Vanguard upcharge constitute a reason to move to a different HSA?

I wanted to confirm if other HSA's have Vanguard fees?  If not, I would be willing to transfer my account.  There are target date Vanguard accounts available (with the same .033% monthly fee) that would seem reasonable to use if I remain with this HSA company.

Please know I appreciate any guidance or comments.  I have work to do to shape things up I know.

 

[pulpsnatcher]

Placing this under estate planning was in error.... probably should have been retirement planning or general investing.

[Peds]

Consider moving to Fidelity, and read this: https://www.whitecoatinvestor.com/the-best-health-savings-account/

You can do so at anytime without tax considerations.

[pulpsnatcher]

Thank you Peds… I should have known to look up in archives.  Rookie move on my part.

[jfoxcpacfp]

pulpsnatcher wrote:

Placing this under estate planning was in error…. probably should have been retirement planning or general investing.

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Gotcha moved although @peds already took care of you. May help others.

[jhwkr542]

Since you're nearing retirement, it might be worthwhile to start moving it to a more conservative allocation.  HSA loses most of its tax advantages on death (except when your spouse inherits), so you should plan to start using it in retirement over any Roth money you have.

[pulpsnatcher]

Great point.  In my case, I am in fact married.  Should my wife die at age 90 that is some 38 years away.  So we have time to grow this a bit.  It provokes some thought as to when it would become prudent to engage this resource as it presently just an investment tool, but poorly managed on my part.

[Lithium]

My employer uses Health Equity.  I moved it a couple of years ago, first to Saturna and now Fidelity.  Not only does their wrap fee cost you over $300 a year, but you are required to keep $2,000 in cash.  Add the wrap fee and the cost of cash drag, and on an average year that costs you around $500.

I have read from other posters here that the average couple in retirement has $250k in retirement medical expenses.  So I would move it to Fidelity and go aggressive.  First I would change the investments in Health Equity to securities that are commission-free to exchange at Fidelity.  If you need to leave the Health Equity account open because it is the custodian designated by your employer, I would keep $25 in cash (the closing fee) there so it is not closed.

[One Wet Bandit]

You should also take into consideration where you live before deciding your allocation in the HSA.  If you live in NJ or California the HSA gets taxed- so you dont want to get too aggressive there- I switched my funds to Fidelity for reasons stated above but basically keep my fixed income/bond allocation in it (treasury funds) to avoid paying state taxes since I live in NJ.

[Dreamgiver]

Lithium wrote:

My employer uses Health Equity.  I moved it a couple of years ago, first to Saturna and now Fidelity.  Not only does their wrap fee cost you over $300 a year, but you are required to keep $2,000 in cash.  Add the wrap fee and the cost of cash drag, and on an average year that costs you around $500.

I have read from other posters here that the average couple in retirement has $250k in retirement medical expenses.  So I would move it to Fidelity and go aggressive.  First I would change the investments in Health Equity to securities that are commission-free to exchange at Fidelity.  If you need to leave the Health Equity account open because it is the custodian designated by your employer, I would keep $25 in cash (the closing fee) there so it is not closed.

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My wife employer also goes through Health Equity. Does it mean we have to use them or can I transfer the money from HE to a different brokerage every month as it comes into the account?

[jfoxcpacfp]

Dreamgiver wrote:

My wife employer also goes through Health Equity. Does it mean we have to use them or can I transfer the money from HE to a different brokerage every month as it comes into the account?

Click to expand...

She can make trustee-to-trustee transfers as often as she wants. I'd recommend Lively or Fido. I do not know if this will save you the wrap fee of $300/yr (ouch!)

[Lithium]

jfoxcpacfp wrote:

Dreamgiver wrote:

My wife employer also goes through Health Equity. Does it mean we have to use them or can I transfer the money from HE to a different brokerage every month as it comes into the account? 

Click to expand…

She can make trustee-to-trustee transfers as often as she wants. I’d recommend Lively or Fido. I do not know if this will save you the wrap fee of $300/yr (ouch!)

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The wrap fee I calculated was based on the prior poster's balance of $81k.

[jfoxcpacfp]

Lithium wrote:

The wrap fee I calculated was based on the prior poster’s balance of $81k.

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Got it, thx!

[CFEonline]

jfoxcpacfp wrote:

Dreamgiver wrote:

My wife employer also goes through Health Equity. Does it mean we have to use them or can I transfer the money from HE to a different brokerage every month as it comes into the account?

Click to expand…

She can make trustee-to-trustee transfers as often as she wants. I’d recommend Lively or Fido. I do not know if this will save you the wrap fee of $300/yr (ouch!)

Click to expand...

Is an HSA a feature of an employer, or the health plan? You need a high deductible plan to be eligible for contributing to one. Some employers or plans seem to offer additional contributions to the HSA as a benefit. However, can the employer or your health plan actually dictate which company you keep your HSA at? Reading between the lines here it seems possible, as that would really be the only reason you would want to have two HSA open and be doing these trustee to trustee transfers, or am I missing something?

 

Lithium wrote:

The wrap fee I calculated

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What is the wrap fee at Health Equity you are referencing?

 

On a separate note, what happens if you switch to a non-eligible, non-high deductible health plan in the future. Obviously you can't keep contributing to the HSA during those years. Presumably you can keep the HSA open and investing? Can you still withdraw the funds tax free for health care expenses, even if you now have a more traditional health plan that is not HSA eligible?

[GasFIRE]

CFEonline wrote:

On a separate note, what happens if you switch to a non-eligible, non-high deductible health plan in the future. Obviously you can’t keep contributing to the HSA during those years. Presumably you can keep the HSA open and investing? Can you still withdraw the funds tax free for health care expenses, even if you now have a more traditional health plan that is not HSA eligible?

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I asked a similar question last month:

https://www.whitecoatinvestor.com/forums/topic/future-hsa-disbursement-question/

@spiritrider clarifies the issue, but essentially once the HSA is established, you can continue to use it to invest and pay for any qualified expenses for you/spouse/dependents in the future.