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Thoughts on Transferring HSAs

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  • Thoughts on Transferring HSAs

    I currently have an employer-provided HSA through UMB. My contributions are entirely allocated to VBTLX as part of my 25% overall bond allocation. The issues I have with this HSA are as follows:
    • I am unable to maximize my contributions at the beginning of each year because my employer requires pre-tax contributions to be divided up among the 26 pay periods each year.
    • There is a $3.00 investment account administration fee each month.
    • I am constantly having to follow up with my benefits office because I'll have money withdrawn from my paycheck that won't transfer over to my HSA for several weeks.
    Is it worth transferring my HSA to a low cost HSA like Fidelity even though I would lose the benefit of pre-tax payroll contributions?
    Would it be preferable to continue pre-tax contributions to my HSA at UMB and then transfer those to Fidelity once annually?
    Is it even feasible to coordinate with my employer pre-tax contributions to my Fidelity HSA instead?

    Would my life just be easier if I made post-tax contributions to an HSA with Fidelity?

  • #2
    Originally posted by GUdoc View Post
    I currently have an employer-provided HSA through UMB. My contributions are entirely allocated to VBTLX as part of my 25% overall bond allocation. The issues I have with this HSA are as follows:
    • I am unable to maximize my contributions at the beginning of each year because my employer requires pre-tax contributions to be divided up among the 26 pay periods each year.
    • There is a $3.00 investment account administration fee each month.
    • I am constantly having to follow up with my benefits office because I'll have money withdrawn from my paycheck that won't transfer over to my HSA for several weeks.
    Is it worth transferring my HSA to a low cost HSA like Fidelity even though I would lose the benefit of pre-tax payroll contributions?
    Would it be preferable to continue pre-tax contributions to my HSA at UMB and then transfer those to Fidelity once annually?
    Is it even feasible to coordinate with my employer pre-tax contributions to my Fidelity HSA instead?

    Would my life just be easier if I made post-tax contributions to an HSA with Fidelity?
    that sounds like a lot of hassle, I would not do it--I fully fund on Jan 2, invest the cash (this year on Jan 7) and am done. off the top of my head ,the pretax savings is $120 for a family plan. I am 100% equities, so one could argue there is a little more opportunity cost of waiting (cf to bonds). up to you! see if they will waive that admin fee for a big enough balance or auto investing.

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    • #3
      If $3 per month is all you’re paying, consider yourself lucky. My former employer used Health Equity and I was charged 0.4% AUM, and I had to keep $1 or $2k in cash. The math definitely favored me to move to Fidelity every year.

      If you don’t use your employer’s plan, you’ll lose out on the FICA tax savings, which is over $100 a year for a non family plan, assuming you’re exceeding the SS wage base. That’s worth more than the $36 in fees.

      If your employer’s custodian has other fees (AUM based or cash drag), then reconsider.

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