How to transfer your HSAs (2024)

FAQs

How to transfer your HSAs? ›

You contact your current HSA provider and request it send you a check or direct deposit of your funds, so you can set up an HSA rollover. Then you have 60 days to deposit those funds into your new HSA account. If you fail to do so, the IRS will levy income tax on the amount you rolled over, plus a 20% penalty.

You can rollover HSA funds once within a 12 month period. Even if you no longer contribute monthly funds to an HSA, you can still transfer your funds to a new account. That means whether you previously had a HDHP, are now on Medicaid, or something else entirely, you're still able to transfer and use your HSA funds.

When changing jobs, you can consolidate your old HSA into a new HSA offered by your next employer, keep your old HSA, or roll over to a new HSA under a different financial services firm. You could also keep your old HSA although that may entail fees that may have been previously covered by your employer.

Online Transfer – On HSA Bank's Member Website, you can transfer funds from your HSA to an external bank account, such as a personal checking or savings account. There is a daily transfer limit of $2,500 to safeguard against fraudulent activity.

No. However, you are allowed to make a one-time transfer from an IRA to an HSA. You are also allowed to rollover funds from an Archer MSA or an existing HSA to a new HSA.

Yes, you can cash out your HSA at any time. However, any funds withdrawn for costs other than qualified medical expenses will result in the IRS imposing a 20% tax penalty. If you leave your job, you don't have to cash out your HSA.

Unlike many other health plans, the balance in your HSA account carries over indefinitely. This means that any extra money you have at the end of the year does not disappear or reset. Instead, it remains in your account and continues to grow over time.

Last-month rule.

Under the last-month rule, if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers), you are considered an eligible individual for the entire year.

But if it's not an earth-shattering emergency, you're probably better off keeping your HSA. If you close your HSA and withdraw all the money, you're going to have to pay income tax on the withdrawal, plus a 20% additional tax if you're under age 65.

All of the money in an HSA (including any contributions deposited by an employer) is owned by the employee even if they leave their job, lose their qualifying coverage or retire. The money in an HSA never expires. Unlike flexible spending accounts (FSAs), all remaining HSA funds roll over each year.

Can I use HSA for home purchase? ›

With this type of capital pooling, an HSA need not contain a large balance to enter the real estate market. IRA and HSA account holders can also obtain mortgages on behalf of their account-owned investments, just as they can when purchasing a home.

Maxing out your HSA each year easily allows your funds to grow over time.

Investing through an HSA

Think of your HSA as a home for your medical money. Just like a brokerage account or an IRA, you'll need to put money into the account before you buy investments. Then, after you fund the account, you can start investing.

You can transfer your funds to a new HSA provider any time you wish, and it's usually a simple process. If you want to keep your HSA with your old employer, know that you may have to pay a maintenance fee to keep it open.

If you don't like your employer's HSA, your best option is to open your own HSA and transfer the money you've been saving into that account! If your employer contributes money to your HSA every month, you can set up monthly transfers of the same amount to funnel cash from one account to the other.

Contact your HSA provider and follow the steps to initiate a transfer. Place trades and manage your account through Schwab's electronic channels, such as Schwab.com, mobile applications, and automated phone services.