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will this trigger cap. gain
Old 08-28-2020, 03:52 PM   #1
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will this trigger cap. gain

Have a HSA acct with my ex-employer, investment is with TDAmeritrade. ex-employer is now switch from administrator A to B and has to liquidate all my holdings. I live in CA and cap gain in HSA is taxable from what I learned.


But in my case, is the cap gain still taxable? I think they'll liquidate the holdings and transfer $ to the new brokerage firm.
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Old 08-28-2020, 04:17 PM   #2
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"The IRS allows each HSA account holder to “roll over” their funds to a new HSA provider every 12 months and maintain the tax-advantaged status of the HSA. If you request a “rollover,” the HSA custodian will send the funds to you via check or transfer to your personal bank account (not your HSA)."

For your investments, you should also request a rollover to avoid taxes. Whatever you do, don't liquidate holdings, as you will trigger unnecessary taxes.
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Old 08-28-2020, 04:21 PM   #3
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"The IRS allows each HSA account holder to “roll over” their funds to a new HSA provider every 12 months and maintain the tax-advantaged status of the HSA. If you request a “rollover,” the HSA custodian will send the funds to you via check or transfer to your personal bank account (not your HSA)."

For your investments, you should also request a rollover to avoid taxes. Whatever you do, don't liquidate holdings, as you will trigger unnecessary taxes.



they already liquidated this morning, is there any way to fix this?
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Old 08-28-2020, 05:54 PM   #4
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This should not be a taxable event. The employer is simply changing management firms. The holdings had to be sold to make the transfer. Either the new firm doesn't offer the same investments or the transfer of the actual investments was too complicated for them to easily deal with. Your holdings were sold, the cash is then transferred directly to the new provider/management firm and the cash will then be invested in the manner you direct. Your biggest risk is market up/down moves while you are in cash. I would expect the transfer to take anywhere from just a couple of days to a month or longer depending on the management firm/record keeper.
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Old 08-28-2020, 06:08 PM   #5
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Originally Posted by ER_Hopeful View Post
Have a HSA acct with my ex-employer, investment is with TDAmeritrade. ex-employer is now switch from administrator A to B and has to liquidate all my holdings. I live in CA and cap gain in HSA is taxable from what I learned.


But in my case, is the cap gain still taxable? I think they'll liquidate the holdings and transfer $ to the new brokerage firm.
In short, no. As long as the money stays in the HSA and you don't withdraw or receive it then it isn't a taxable event.
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Old 08-28-2020, 06:15 PM   #6
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This should not be a taxable event. The employer is simply changing management firms. The holdings had to be sold to make the transfer. Either the new firm doesn't offer the same investments or the transfer of the actual investments was too complicated for them to easily deal with. Your holdings were sold, the cash is then transferred directly to the new provider/management firm and the cash will then be invested in the manner you direct. Your biggest risk is market up/down moves while you are in cash. I would expect the transfer to take anywhere from just a couple of days to a month or longer depending on the management firm/record keeper.
+1 for federal tax treatment.

Since you are in California, so am I, the state treats HSA accounts just like another investment broker account, so all interest/dividend/gains are taxed. I do not have any links to provide the above facts. Maybe you can do Google.

If you have TurboTax you might be able to run a mock return to check on the state portion.
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Old 08-28-2020, 06:23 PM   #7
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Haha, yeah California!

I dutifully report annually the 2 bucks interest I earned on my HSA. Contributions are also not deductable. You would think that with all the "healthy green low emission tree hugging" going on that they would like healthy HSA people but no...

Fork over the dough!
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Old 08-28-2020, 07:15 PM   #8
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Originally Posted by pb4uski View Post
In short, no. As long as the money stays in the HSA and you don't withdraw or receive it then it isn't a taxable event.
True at the federal level, but apparently (based on some Googling I did this afternoon), CA and NJ don't recognize HSAs at the state level, so they are taxed basically like regular taxable accounts.
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Old 09-04-2020, 09:52 AM   #9
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the transfer has been completed bwtn the old and new HSA custodians (money did not pass thru me) today, but the new HSA has limited fund choices.



I also have a HSA with Fidelity thru my current employer, my understanding is that I can do another trustee-to-trustee transfer right away from the new HSA to Fidelity, the one-rollover-per-12-month rule does not apply here,is this correct?
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