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Ouch. Thanks for the new HSA, Megacorp.
Old 01-05-2012, 04:06 PM   #1
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Ouch. Thanks for the new HSA, Megacorp.

My employer switched HSA custodians this year and I'm just now looking at my options with my existing balance and future contributions. (We have to move our existing balances by March 1 or start paying a $3 monthly service fee.) Lo and behold, I looked at the investment options section.

My plan is to hold 2-3 years of out of pocket maximums in cash and invest what's above that, probably in a balanced fund or lifecycle fund for 2020 or 2025. But then I read the fine print...

Each mutual fund purchase will incur a $14.95 fee. Unless we opt for regularly recurring automatic transactions of $100 or more at a time, in which case they'll be "nice" enough to only charge $2 per transaction.

So now I'm not sure I'm even better off moving my existing HSA balance (a little under $20K) to the new custodian. I may be better off eating those fees. Hmm. Yuck. Need to get to a spreadsheet here...
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Old 01-05-2012, 04:09 PM   #2
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Does your employer fund part of the deductible? I don't think you have to use your company's HSA choice, but that also means you don't get payroll deduction or the employer's $.

HSAs are expensive when it comes to investments -- at least in comparison to what any of us could do in our self-directed accounts.

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Old 01-05-2012, 04:15 PM   #3
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Originally Posted by Gotadimple View Post
Does your employer fund part of the deductible? I don't think you have to use your company's HSA choice, but that also means you don't get payroll deduction or the employer's $
They contribute $1000 a year for me, and it has to go into that one. (It's a contribution, not a match, which we'd get even without contributing a dime of our own.) Whether I put any of my own in doesn't matter.

I could continue to use the old HSA with that monthly fee by directly contributing outside my paycheck, but it would be outside of a qualified Section 125 cafeteria plan so I'd lose the tax exemption from Medicare and SS taxes, which would be a fairly big deal on contributions of a little more than $5000 a year (in addition to the $1000 Megacorp gives me). So I don't think it would pay to contribute new money to my existing HSA -- I either keep it as is or transfer it all; new money needs to go to the new custodian if I want to save on payroll taxes.

I'm leaning toward transferring it over, holding my nose and eating one transaction fee on about a $10K mutual fund purchase and then refilling my cash bucket to the 2-3 year level I'm comfortable with (i.e. $12-18K in cash, give or take, with a $6K out of pocket annual maximum).

Also, if that recurring $2 charge for new automatic purchases can be done on schedules that are done every 3, 6 or 12 months it won't be so bad.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
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Old 01-05-2012, 04:16 PM   #4
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I was underwhelmed with my choices as well while working, may not be unusual. Our HDHP/HSA investment options were all ultra conservative cash equivalents, so I was in it only for the tax advantage and company contributions. They charged us $1 month admin fee and every time we spend anything from the account they charge $1.50. Once retired, I looked into moving the account to VG or anywhere else, but not allowed as far as I can tell. So where I'd hoped to invest and grow that account in the years ahead, since cash is yielding next to nothing now, DW and I are spending it as each qualified medical expense comes up, we have about $30K to plow through til it's gone.
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Old 01-05-2012, 08:21 PM   #5
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Quote:
Originally Posted by Midpack
I was underwhelmed with my choices as well while working, may not be unusual. Our HDHP/HSA investment options were all ultra conservative cash equivalents, so I was in it only for the tax advantage and company contributions. They charged us $1 month admin fee and every time we spend anything from the account they charge $1.50. Once retired, I looked into moving the account to VG or anywhere else, but not allowed as far as I can tell. So where I'd hoped to invest and grow that account in the years ahead, since cash is yielding next to nothing now, DW and I are spending it as each qualified medical expense comes up, we have about $30K to plow through til it's gone.
Why can you not transfer HSA? Do you not have a HDHP now? Im thinking about moving mine to a bank that pays 2.5% and no fees. Currently Im getting .7%. I need to determine if I want to use the excess in those high fee mutual fund purchases or not before I move, though.
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Old 01-06-2012, 08:24 AM   #6
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Why can you not transfer HSA? Do you not have a HDHP now? Im thinking about moving mine to a bank that pays 2.5% and no fees. Currently Im getting .7%. I need to determine if I want to use the excess in those high fee mutual fund purchases or not before I move, though.
Maybe I should restate.
  • I am now retired, so I don't have the HDHP plan anymore, just the HSA money that was generated during my last 5 years of employment.
  • As for moving the HSA, I asked Vanguard if I could move the money to an account with them, and they said no. Maybe I need to ask another financial institution (that has other investment options and/or fewer fees), do you know that the money can be moved?
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Old 01-06-2012, 01:10 PM   #7
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Quote:
Originally Posted by Midpack
Maybe I should restate.
[*]I am now retired, so I don't have the HDHP plan anymore, just the HSA money that was generated during my last 5 years of employment.[*]As for moving the HSA, I asked Vanguard if I could move the money to an account with them, and they said no. Maybe I need to ask another financial institution (that has other investment options and/or fewer fees), do you know that the money can be moved?
I definitely know that money can be moved. You can do an institutional transfer, or just drain the money out and set it up in a new account within 60 days to avoid penalty. Are you on medicare or just a " regular plan"? I did the opposite. I didnt start a HDHP until after I retired. I know if you currently
do not have a HDHP you cant open up or add to an HSA, but I have never read you cannot transfer HSA accounts while not having an HDHP. Vanguard from what I understand is not directly involved in the HSA business, so they wouldnt accept your money anyway. 30K is a nice 'stache for an existing HSA. Im hoping to stay healthy and build mine up significantly over next 17 years, and use it to pay for medicare premiums and the various health ailments that will afflict me in old age.
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