Transferring HSA money to a new HSA account

[Mulligan]

I found a small town bank within driving distance that pays significantly higher interest than I am currently getting. They don't seem to know too much about HSA and I don't want to get involved in multiple trips there. Has anyone ever just wrote a check from the funded HSA account for the full account balance and just deposited it into the other account, and then closed the other account later? Just trying to skip all the wiring paperwork. I would like to hand it all over and this years amount at the same time. Any tax trip ups to be aware of so it's not considered a taxable distribution? Based on my phone call, I am sure they won't know.


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[REWahoo]

I thought a bank or credit union had to be a designated HSA custodian to manage HSA funds. Your statement "They don't seem to know too much about HSA..." makes me wonder if they are actually a custodian bank. You should be able to determine if they are using this link: Consumer Home

 

[Mulligan]

I thought a bank or credit union had to be a designated HSA custodian to manage HSA funds. Your statement "They don't seem to know too much about HSA..." makes me wonder if they are actually a custodian bank. You should be able to determine if they are using this link: Consumer Home

They weren't in your link, but they were in another one I found. Their website had HSA accounts listed and when I called they verified their interest rate. You have to come in person though as they will not set them up online. She did say I need to bring my drivers license to verify who I am. She sounded ok until I said I wanted to transfer funds also. She said She didn't think it would be a problem getting the transfer. But I had to talk to 2 people before I could talk to a person who knew anything about them. I'm afraid I will show up and be there on a day when a low wattage person is there so I want to make it easy. Just deposit this in my account and let's get the interest flowing!


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[zinger1457]

Has anyone ever just wrote a check from the funded HSA account for the full account balance and just deposited it into the other account, and then closed the other account later?

I've had two HSA custodians and neither offered check writing as an option. When I decided to open a new HSA account the old HSA account holder had me fill out a HSA account closing form then mailed me a check for the balance.

 

[MichaelB]

The warnings about the custodian should be taken seriously. My first choice ended badly.

If you do choose to use the new bank, the transfer of existing funds needs to be kept separate from depositing new funds. It's like an IRA. You get your check, your current bank will issue a 1099-SA, you need to deposit the same amount in the new bank using a "transfer/rollover request form". You have 60 days from the date of the check. If they don't have a specific transfer / rollover form, walk away.

 

[audreyh1]

The new HSA account can do the transfer for you from another HSA. If they don't know about HSA - don't attempt to open such an account.

 

[ziggy29]

If they don't know about HSA - don't attempt to open such an account.

+1

If they aren't familiar with how to do this the right way, run away -- because if they screw it up you could have significant tax problems on your hands.

 

[Mulligan]

I will head the advise. I will be up in area anyways soon. I will ask about their transfer procedures. I think there is just one specific person knowledgable about the process, so I will need to make sure I hook up with that person. The way they talked anyways, I think they will want to pass me on to her like a hot potato anyways.


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[thefinancebuff]

Has anyone ever just wrote a check from the funded HSA account for the full account balance and just deposited it into the other account, and then closed the other account later?

Yes. The receiving account needs to recognize it as a rollover contribution. You usually fill out a form. You can only do a rollover like this once per rolling 1-year period.

 

[Dave J]

I also have done this by writing a check (two different times years apart)and making sure receiving credit union or bank marked it as a rollover contribution.

 

[Mulligan]

Yes. The receiving account needs to recognize it as a rollover contribution. You usually fill out a form. You can only do a rollover like this once per rolling 1-year period.

I got the idea to do it from this article. Is this by chance your website? I enjoy reading it.

http://thefinancebuff.com/how-to-rollover-an-hsa-on-your-own-and-avoid-trustee-transfer-fee.html




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[Mulligan]

I also have done this by writing a check (two different times years apart)and making sure receiving credit union or bank marked it as a rollover contribution.

Dave, did you clean the account out? That was my thought and then call and tell them to cancel my account after I got the cash out.


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[Dave J]

Dave, did you clean the account out? That was my thought and then call and tell them to cancel my account after I got the cash out.


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Yes, I did write a check for entire balance. I called my old bank to tell them my intention was closing the account so I did not get any low balance, ect. fees.

 

[thefinancebuff]

I got the idea to do it from this article. Is this by chance your website? I enjoy reading it.

How To Rollover an HSA On Your Own and Avoid Trustee Transfer Fee

Yes it is. Thank you.