HSA Transfers From One CU To Another - Best Way? People With HSAs Please Help!

hsaguy   |     |   1 posts since 2018

Hi, please help!

Suggestions please, on the best way to transfer most (but NOT all) of my funds from an HSA Savings/Checking Account at "Credit Union #1" to my recently-opened HSA Savings/Checking Account at "Credit Union #2?"

I have about $11,000 and want to transfer most of it out to CU#2, but still keep maybe $100 at CU#1 (to keep my foot in the door, just in case I want to move my funds back there at a later time).

But please read these details, as it's the details that make it hard to decide how to do this.....

(1) Both Credit unions are very SMALL ones, and often seem unorganized and not "on top of things."

(2) Normally the best way to do a transfer would be to have CU#2 request the funds from CU#1. If it's institution-to-institution, it keeps it nice and clean for the IRS. If you instead take out the money yourself and re-deposit it into an HSA, you must do so within a timeframe (60 days I think?), and must make sure the 2nd place codes it properly as a roll-over/transfer, not a deposit -- otherwise the IRS will think you've taken the money and gone to Vegas with it. Making it even less appealing to do it myself, is that you're only allowed to do so once every 365 days. So if something came up later where I wanted to move the funds somewhere else, and I've already used my "once-a-year" chance now, I won't have that option later on.

(3) But the problem with asking that it be done institution-to-institution in this case, is two-fold: First, I can't seem to get reliable information if either (or both!) CUs would charge a fee for such a CU-to-CU transfer. I know most CUs/banks charge $35 to $50 when you CLOSE or move out an IRA/HSA to another place... but would that fee be charged if you're asking the institution to move just some of the funds, but aren't closing out the account completely? Technically I wouldn't be "closing out" (since I'd still keep a tiny bit in the original place), but still, because these are both tiny credit unions, I can't get clear information if there would be a fee for that or not. Just wondering if anyone else has tried to move partial (but not all) HSA funds from one institution to another. I'd rather not pay $35-$50 fees, especially if I'm not closing out the account completely.

(4) A general (not HSA) rep at the CU where the funds would be going said something like "normally we'd submit the paperwork for you, requesting the funds be sent to us, but not all institutions will honor that paperwork from another institution, you might have to request the funds be released yourself" ... but then it becomes unclear whether it would still be institution to institution or not? I don't want to be turned into a ping pong ball. But at the same time, I don't want to trigger anything from the IRS by doing it myself (years ago, when transferring an IRA, not HSA, the 2nd institution where it was going didn't code it correctly even though I asked them to, and it took months to clear it up with the IRS.) Again, these are small CUs.

(5) I do have HSA checks for both CUs, so I could "write an HSA check myself" from my HSA account (instead of having the CU mail me out a bank check) but wouldn't that still count as my "one-time-a-year, doing-it-yourself" method?

I know each CU is different, but I was wondering what people's experiences have been with moving funds -- especially moving partial funds. I know most charge to CLOSE OUT an HSA/IRA, but have any of you just transferred PART of your HSA money from one institution to another? How did you do it? Did your CU (on either end) charge you a fee for the paperwork they have to do? What problems did you encounter doing it this way?

Likewise, has anyone moved HSA money from one institution to another themselves (instead of having the institution do it?) What problems did you encounter? How did you do it? Did you write an HSA check yourself from your HSA savings/checking account, or have the CU/bank send you a bank check?

Any thoughts/suggestions would be appreciated. I'm not in any particular rush, but would like this done by Christmas.

jamesstewart   |     |   25 posts since 2011
I moved HSA funds from one credit union to another CU this year using my "once a year, 60 day" rollover option. I just had the CU move my funds into a non-HSA account and then went to the receiving CU and wrote them a check from a non-HSA account and told them that I was doing a rollover. They did the paperwork with a check mark next to "rollover" on the contribution form.

When I do my income tax, I will report the rollover amount on form 8889.

You could also try a "direct transfer" by hand carrying a CU produced check from one CU to the other CU. The check should be made out to the receiving institution and both CU's should fill out the paperwork as if they did it without you as the carrier. Ask them if they still would charge if you do the leg work. This method avoids the once-a-year rule.

Whatever you do, make sure you go over the paperwork with the CU to check if things are coded correctly. Also, get familiar with the exact IRS terms for what you are wanting to do.

My credit unions do not charge for these transfers and I specifically read an institution's Fees List as well as ask about fees before opening HSA or IRA accounts. I've been burned by these fees before! If there is a closing fee, leave less than a dollar in the account and forget about it. Ask for a copy of the CU's current fee list (or check their web site).

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