Can I Move My HSA Account to Another Bank?

A Health Savings Account (HSA) offers a tax-advantaged way to save and pay for qualified medical expenses for individuals enrolled in a high-deductible health plan (HDHP). These accounts are individually owned, meaning the funds belong to the account holder even if established through an employer. The clear answer is yes, HSAs are portable and can be transferred between custodians.

Types of HSA Transfers

Moving an HSA involves two primary methods: a direct trustee-to-trustee transfer or an indirect rollover. A direct trustee-to-trustee transfer is the simplest and most secure way to move HSA funds. The new HSA custodian directly requests the funds from the existing custodian, and the money moves between institutions without the account holder physically handling the funds. This method eliminates the risk of missing a deadline or incurring tax penalties.

An indirect rollover is another option, where the current HSA custodian distributes the funds directly to the account holder. The account holder then has a strict 60-day period to deposit the full amount into a new HSA. Failing to redeposit the funds within this timeframe can result in the entire amount being considered a taxable distribution, subject to income tax and penalties. While direct transfers can be performed without limitation, indirect rollovers are restricted to one per 12-month period across all of an individual’s HSAs.

Preparing for an HSA Transfer

Before initiating any transfer, careful preparation ensures a smooth process. First, select a new HSA custodian that aligns with your financial goals, considering factors like fees, investment options, and customer service. Establish a new HSA with them before requesting the transfer of funds, ensuring an active account is ready to receive the assets.

The new custodian will provide the necessary forms to initiate an inbound transfer. These forms often include a “Direct Transfer Request Form” or a similar document designed for trustee-to-trustee transfers. Accurately complete this paperwork with details from both your existing and new HSA accounts. Key information required includes your current custodian’s name and address, your existing HSA account number, and the full amount you intend to transfer.

Gather specific contact information for your current custodian’s transfer department to streamline the process. Before submitting the forms, review them carefully and ensure all fields are completed. Some custodians may require a medallion signature guarantee for larger transfer amounts; confirm this requirement beforehand to prevent delays.

Executing an HSA Transfer

Once preparatory steps are complete, executing the HSA transfer involves submitting the required documentation. For a direct trustee-to-trustee transfer, submit the completed transfer request form to your new HSA custodian. They will then initiate contact with your previous custodian to facilitate the transfer of assets.

The new custodian will handle the communication and logistical aspects of moving the funds. This involves sending the signed transfer form to your former custodian, who processes the request and sends the funds, often via check, to the new institution. The process typically takes a few weeks.

You can track the status of your transfer by contacting your new custodian. While funds are in transit, your old HSA balance may temporarily show as zero, which is a normal part of the process. After the new custodian receives and processes the funds, they are deposited into your new HSA, making them available for use or investment.

Key Considerations for HSA Holders

When moving an HSA, several practical considerations can impact the experience and financial outcome. Understanding potential fees is important. Your existing custodian may charge an account closing fee or a transfer out fee, which can range from approximately $20 to $50. Some new custodians may also have monthly maintenance fees, though many offer no-fee accounts or waive fees for certain minimum balances, typically between $1,000 and $5,000.

The timeline for transfers can vary significantly. While indirect rollovers might take two to four weeks, direct trustee-to-trustee transfers can sometimes extend up to eight weeks, influenced by the processing times of both financial institutions and mail delivery if checks are involved. For indirect rollovers, strictly adhering to the 60-day deadline is crucial. Failure to deposit the funds within this window means the distribution becomes fully taxable as ordinary income and is subject to a 20% penalty, unless an exception applies.

Considering investment options is important, especially if your current HSA holds investments. Some custodians may require liquidation of investments before transferring funds, while others support “in-kind” transfers of securities, preserving your existing portfolio. Understanding these policies and comparing the investment platforms, including any associated fees like expense ratios or trading costs, is beneficial for optimizing your HSA’s growth potential.