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Transfer HSA account to my Fidelity HSA account
Old 08-12-2019, 10:59 AM   #1
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Transfer HSA account to my Fidelity HSA account

My HSA account with old Megacorp is invested in a Vanguard fund and they charge 2 fees total about $11 per month. I recently opened a Fidelity HSA account. I want to transfer old HSA account to Fidelity and I was told that I can only transfer accounts with cash. I will have to sell the fund first in my old HSA account before transferring to Fidelity.

I am in California which taxes HSA account like a cash account. Selling my fund will incur a state capital gain. I am trying to manage my MAGI for ACA subsidy. I think increasing my state income does not affect my overall federal MAGI per ACA subsidy. But I want to ask this question here to make sure there is no impact to federal MAGI.

Thanks
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Old 08-12-2019, 11:13 AM   #2
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I would agree.... ACA subsidies are based on federal MAGI.

On another subject, is it worth prepaying the state tax to save $11/month?

Do you have any plans to change states in the near future? If so, perhaps wait.
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Old 08-12-2019, 11:19 AM   #3
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I moved mine to Fidelity and had to do exactly what you’ve been told - convert all assets to cash first. After that, the move went forward with no issue. I live in Michigan. The transaction did not effect my State or Federal taxes. Similar to an IRA.
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Old 08-12-2019, 11:20 AM   #4
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Quote:
Originally Posted by fh2000 View Post
My HSA account with old Megacorp is invested in a Vanguard fund and they charge 2 fees total about $11 per month. I recently opened a Fidelity HSA account. I want to transfer old HSA account to Fidelity and I was told that I can only transfer accounts with cash. I will have to sell the fund first in my old HSA account before transferring to Fidelity.

I am in California which taxes HSA account like a cash account. Selling my fund will incur a state capital gain. I am trying to manage my MAGI for ACA subsidy. I think increasing my state income does not affect my overall federal MAGI per ACA subsidy. But I want to ask this question here to make sure there is no impact to federal MAGI.

Thanks
Does it incur a gain when you change investments to cash, even if you do not transfer? Then transfer?

You do not actually take possession of the money, similar to an IRA rollover.

I transferred my HSA to Fidelity a year or so ago. No 1099, just a simple transfer.
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Old 08-12-2019, 11:27 AM   #5
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Does it incur a gain when you change investments to cash, even if you do not transfer? Then transfer?

You do not actually take possession of the money, similar to an IRA rollover.

I transferred my HSA to Fidelity a year or so ago. No 1099, just a simple transfer.
Unfortunately, California does not treat HSA accounts as IRA. They are like broker accounts. All interests/dividends/capital gains are taxed each year. It is a pain I know, since HSA bank do not even issue 1099 for annual state tax purposes. At least I have never received any. I had to track and record state tax on my own.

We have no plans to move to any other state.

If we start using the money for medical payment, I will have to liquidate and face state tax anyway, so I may just go ahead and sell then transfer to save a few dollars each month, plus no federal MAGI impact, looks like.
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