Consolidating your HSAs
If you’ve had a couple of employers, you might have a handful of old HSAs floating around. You’re probably very aware that every extra account just means additional account numbers and logins to keep track of, and so might’ve considered consolidating your accounts into one.
For HSAs, there are two methods of consolidation: the rollover vs. the transfer. Read on to learn about the differences, and why you might prefer one over the other.
HSA rollovers
In an HSA rollover, your origin HSA will mail you a check. Once you receive the check, it’s your responsibility to transfer the check into your destination HSA within 60 days from the withdrawal.
If you don’t move the money into the new HSA within that time frame (60 days), you’ll be liable for income taxes on the amount rolled over as well as a 20% penalty. Make sure to keep this in mind when deciding between an HSA rollover vs. transfer. Additionally, keep in mind that you’re limited to one HSA rollover once every twelve months.
HSA transfers
HSA trustee-to-trustee transfers give you a more hands-free option. Instead of the origin HSA mailing a rollover check to you that you’ll then have to forward on to the destination HSA, the origin HSA will initiate a direct transfer to the destination HSA.
This process can take between 4-6 weeks, depending on the HSA institutions involved. This is usually quicker than an HSA rollover, and there isn’t a limit to the number of HSA transfers you can make. You also don’t have to worry about the potential tax and/or penalty risk associated with an HSA rollover.