Can I Move My HSA Account From One Bank to Another?

Moving a Health Savings Account (HSA) from one financial institution to another is a common and permissible action for account holders. They often transfer their HSA to seek advantages such as more competitive investment options, reduced fees, enhanced customer service, or more favorable interest rates on uninvested cash. While the process requires careful attention, it is generally straightforward and allows for greater financial flexibility with these tax-advantaged accounts.

Key Considerations Before Moving Your HSA

Before initiating an HSA transfer, conduct thorough research and evaluate potential new custodians. Comparing fee structures is important, as charges can vary significantly among providers. These may include monthly maintenance fees and potential transfer fees charged by your existing custodian to move funds out.

If you intend to invest HSA funds, a detailed examination of investment options and associated costs is necessary. Custodians offer various platforms, including mutual funds, exchange-traded funds (ETFs), and individual stocks. Investment fees can include expense ratios for funds and trading commissions, though many providers offer commission-free trading. Some custodians also impose minimum balance requirements before allowing funds to be invested.

Evaluating interest rates on uninvested cash balances is also worthwhile, as these can differ substantially. Beyond financial metrics, consider the online banking tools, mobile application functionality, debit card access, and bill payment features offered by prospective custodians. These conveniences can significantly impact the day-to-day management of the HSA. A final consideration involves existing investments within the current HSA; determine whether these can be transferred “in-kind” (without liquidating them) or if they must be sold.

The HSA Transfer Process

After selecting a new HSA custodian, initiate the transfer of funds. There are two primary methods: a trustee-to-trustee transfer or a 60-day rollover.

The trustee-to-trustee transfer is generally the preferred method because it involves the direct movement of funds between the current and new custodians without the account holder taking possession of the money. This method is not subject to annual limits and typically does not require specific tax reporting. To initiate a trustee-to-trustee transfer, the account holder usually contacts the new HSA custodian, who then facilitates the request by working directly with the old custodian. This process often involves completing a transfer request form provided by the new custodian, requiring details of the existing HSA account.

Alternatively, a 60-day rollover (indirect rollover) involves the current custodian distributing funds directly to the account holder. The account holder then has 60 calendar days from receipt to deposit these funds into a new HSA. This method is subject to an IRS rule: only one such rollover is permitted within any 12-month period across all HSAs. Missing the 60-day deadline can result in the distributed funds being treated as a taxable withdrawal, subject to ordinary income tax and a 20% penalty if the account holder is under age 65 and the funds are not used for qualified medical expenses.

Maintaining open communication with both the current and new HSA custodians throughout the process is advisable. The timeline for transfers can vary significantly; a trustee-to-trustee transfer typically takes between four to eight weeks. For a 60-day rollover, the funds may be received by the account holder within two to four weeks, and once deposited, they generally become available in the new account within two to three business days.

Managing Your HSA After the Move

Once the HSA transfer is complete, it is important to verify that all funds and, if applicable, investments have been accurately transferred to the new account. Carefully review statements from both the old and new custodians to confirm the correct amounts and asset allocations. This reconciliation ensures no discrepancies occurred during the transfer process.

Following the successful transfer, update any recurring contributions to ensure they are directed to the new HSA. This may involve adjusting payroll deductions with an employer or modifying direct deposit instructions. Promptly updating this information prevents contributions from being sent to the old, inactive account.

Activate and familiarize yourself with any new features offered by the new custodian, such as a new debit card, online portal, or investment platform. Understanding how to navigate these tools will enable efficient management of the HSA. Keep meticulous records of the transfer, including all correspondence, forms, and statements from both custodians. For tax purposes, a 60-day rollover will typically result in the issuance of Form 1099-SA by the old custodian and Form 5498-SA by the new. Trustee-to-trustee transfers are generally not reported to the IRS by the individual.