HSA rollover and investing

Investing
#1

I have a HSA through work that is with Key Bank. Last year I spent all of my HSA money on medical bills so I only have $250 in the account right now. I plan to max out my HSA for 2020 by the end of the year. I emailed HR and she told me that I can switch my HSA account to Fidelity at the end of the year. She had no idea if I could transfer money from the old account to the new account.

I called Key Bank and they were very helpful. If I want, I could invest with Key Bank but it sounded complex. The rep on the phone said I could buy certain mutual funds and that the money automatically sweeps from account to account. The minimum to invest with the Key Bank HSA is $3,500 and I have to buy $1,000 in mutual funds at a time. Key Bank also charges a fee to buy the mutual funds. I think she said .25%.

I could also do an HSA rollover from Key Bank to Fidelity. All of my other accounts are with Fidelity and I’m comfortable buying stocks using their website.

So my question is, is it a better idea to switch to a Fidelity HSA account or should I pay the transaction fees and stick with the Key Bank HSA that I already have set up?

Are there any additional fees to buy mutual funds in a Fidelity HSA or is that unique to Key Bank?

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#2

As long as it doesn’t cause a hassle with your employer or your contributions, I’d personally roll over to Fidelity. They don’t have those crazy fees, fund options or minimums that Key Bank does. You already know and use Fidelity. I’d go for it. My HSA is with Fidelity and it’s awesome.

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#3

My employer uses KeyBank as well for my HSA.
When I called to invest a portion of my account, it cost a full $25 to place any order (of course they didn’t tell me that until the second time I called to place another order.)

in addition, I have found it to be a light hassle using KeyBank, but im unsure if I can switch mine to Schwab, where I have my Roth IRA.

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#4

Eric,

I’m in the process of rolling my Keybank HSA account to a Fidelity HSA. Call your HR rep and see if they have any restrictions on which bank you can use. My HR rep had no idea, so I needed to keep asking until they decided to investigate.

To transfer my HSA from Keybank to Fidelity, I called Fidelity and they walked me through an online form to perform a trustee transfer. I needed to print my latest Keybank statement and fill in the account number, address and phone number. I needed to mail the form because Keybank requires a wet ink on paper signature.

And predictably, Keybank changes a $25 fee to do this trustee transfer. When I talked to Fidelity, the licensed phone rep suggested that I call Fidelity after the money is transferred and ask to have the fee refunded. He said they normally only do that on larger transfers but it doesn’t hurt to call and ask!

#5

Human Resources sent me an urgent email at the end of 2020 because my Keybank account was closed and my employer couldn’t deposit the employer match portion of my HSA. I told HR that I already maxed out my HSA contributions for 2020 and that I switched banks. It turns out that I can’t use Fidelity and that my employer will only contribute to a Keybank HSA. Make sure to carefully question your HR rep and try to figure out if they are just guessing when answering your questions about retirement accounts.

Fidelity said that I can have two HSA’s at once. I will max out my Keybank every year then trustee transfer the money to Fidelity so I can invest it. It is a little inconvenient but it is the only way I can get the tax advantage.

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