Fidelity funds for HSA (to deplete within 7 years)

[BarbWire]

I recently moved my HSA to Fidelity. It is the only account I have there, and I find the Fidelity website inscrutable (I'm mostly a vanguard person), so I need help figuring out what to buy.

The HSA has $30K in it, and I will contribute another $6K before I reach Medicare in mid-2022. At that point I will use the HSA to pay my Medicare Part B and D premiums as well as my long-term care premium. For simplicity the goal is to deplete the HSA by age 70 (when I begin taking SS) or shortly thereafter. I want the holdings to be "set it and forget it" or rebalance once a year .... again, simplicity.

This suggests holding one or two funds in the HSA -- preferably index for low ER. Assuming I use the funds in the period 2-7 years from now, I'm thinking 75% Total Bond, 25% Total Stock or something similar.

Thoughts? Other suggestions? Thank you!

 

[audreyh1]

That would be OK - but use index funds with lower ER - US Bond Index instead of Total Bond. Total Bond may have almost the same name as Vanguard, but it is not an index fund and has a higher ER.

DH who is drawing his HSA down now, has around 30% US Bond Index, 30% short-term index, 10% total market index, and the remainder in core account for cash plus to cover current year’s expenses.

He dropped to a very low equity exposure in the fund once he started drawing, because he expects to deplete the HSA within 5 years.

 

[cathy63]

I just noticed a couple of days ago that Fidelity has some funds that are only available to their HSA accounts. I took a quick look and realized they were way too high in bonds for us, but one of them might be a good option for you.

Fidelity® Health Savings Fund -- https://fundresearch.fidelity.com/mutual-funds/summary/316069335
Fidelity® Health Savings Index Fund -- https://fundresearch.fidelity.com/mutual-funds/summary/316069319

 

[BarbWire]

@audreyh1: thanks for catching my error in bond fund names. Yes, I intend to stick with index funds, for sure.


@cathy63: interesting find. The Health Savings Index Fund has an ER of 0.19, which isn't bad but isn't great. None the less it might be just fine for a "set it and forget it" small HSA. Not much history -- the fund was started 9 months ago.

 

[jollystomper]

The fund I hold in my Fidelity HSA is Fidelity ZERO Total Market Index (FZROX). Zero fees. Details at https://fundresearch.fidelity.com/mutual-funds/summary/31635T708

 

[Happyras]

I have about 33K in my HSA at FIDO. I invest it in Fidelity OTC portfolio and MINT.

I am really curious why people have a planned depletion in a short term for their HSA account. It is like a ROTH except you need to back up withdrawals with receipts for health expense. I keep a box of receipts, but never do a withdrawal. It earns tax free, and I can pull it anytime to cover past expenses. Or did they somehow change the rules on old Happyras and are going to disallow past expenses? Otherwise it seems silly to pull the funds unless you need tax free cash....

 

[BarbWire]

I have about 33K in my HSA at FIDO. I invest it in Fidelity OTC portfolio and MINT.

I am really curious why people have a planned depletion in a short term for their HSA account. It is like a ROTH except you need to back up withdrawals with receipts for health expense. I keep a box of receipts, but never do a withdrawal. It earns tax free, and I can pull it anytime to cover past expenses. Or did they somehow change the rules on old Happyras and are going to disallow past expenses? Otherwise it seems silly to pull the funds unless you need tax free cash....

I certainly understand that perspective. In my case, I am striving toward simplicity which includes reducing the number of firms at which I have accounts, the number of accounts I have, and the number/variety of holdings in those accounts.

This is a relatively small sum, so there's not a lot of skin in the game. I value simplicity more than the tax-free growth as I ease into my dotage.

 

[jimbee]

My and DW's HSAs are in 100% FZROX because we don't intend to use it in the near term. Since you're planning to spend it soon, an AA like audreyh1 suggested is good. Also +1 to FXNAX for the U.S. bond fund component.

 

[BarbWire]

Thanks, everyone -- I think I'm set with a plan now. I'll place the orders and strike one more thing off the personal finance "to-do" list!

 

[audreyh1]

I have about 33K in my HSA at FIDO. I invest it in Fidelity OTC portfolio and MINT.

I am really curious why people have a planned depletion in a short term for their HSA account. It is like a ROTH except you need to back up withdrawals with receipts for health expense. I keep a box of receipts, but never do a withdrawal. It earns tax free, and I can pull it anytime to cover past expenses. Or did they somehow change the rules on old Happyras and are going to disallow past expenses? Otherwise it seems silly to pull the funds unless you need tax free cash....

You have got to use it sometime. We have plenty of other long term investments. We each aren’t starting SS until 70, so we need to cover Medicare premiums between 65 and 70. Using the HSAs for this purpose is very convenient for us and greatly simplifies the record keeping.

We’d like to be done with it and the associated record keeping and tax filing. So for each of us the plan is to drain HSAs by 70. They are actually small potatoes compared to our other in investments.

 

[BarbWire]

^^^ +1


Yep. KISS.