When can I roll over a HSA?

Question

I have a health savings account with a high-deductible health plan. Because my employer pays less for the plan than for other insurance options, they are willing to contribute money to my HSA account every pay period. I don't get as impressive of a health plan, but I'm a young twenty-something male nonsmoker in decent health and I don't really need it, so, yay free money.

I'm presently low on tax shelters. My current employer does not offer a 401(k) yet, so I'm putting money in an IRA, and I've contributed as much as I can already. I can also put money into the HSA from my paycheck and use it as a tax shelter! However...

My current HSA provider is Comerica Bank. They treat my HSA like a savings account: they guarantee the funds but pay savings-account-style interest rates (i.e. barely anything in this interest rate environment). I have a high risk tolerance, and I would prefer to earn better returns; I don't want to put lots of extra money into an account like that if it's going to be stuck earning savings-account interest until I'm retired (~40+ years) or spend it on medical expenses.

Questions:

• Is it possible to roll over a HSA to a new HSA provider?
• What are the rules governing these rollovers? Would I need to wait to change employers before I could roll over the account, or just until I changed health plans?
• Are there any rollover HSA providers where I can invest money in good cheap index funds?
  • Are there any rollover HSA providers where I can invest money in arbitrary stocks and ETFs?

Answer 1

Wells Fargo offers to rollover existing HSA accounts without mentioning the need to be changing plans, jobs, or providers so I don't think you need a life event to make the switch but you can check with your new provider to make sure prior to opening the account. Like most things HSA-related the rules for rollovers are probably similar to the rules for an IRA but once again your best bet is to check with your new provider.

HSA Administrators allows you to invest in a large variety of Vanguard funds and were the best I found for investing when I was looking.

Answer 2

To answer your first two questions: according to IRS pub 696 "Contributions to an HSA" section:

Rollovers

A rollover contribution is not included in your income, is not deductible, and does not reduce your contribution limit.

Archer MSAs and other HSAs. You can roll over amounts from Archer MSAs and other HSAs into an HSA. You do not have to be an eligible individual to make a rollover contribution from your existing HSA to a new HSA. Rollover contributions do not need to be in cash. Rollovers are not subject to the annual contribution limits. You must roll over the amount within 60 days after the date of receipt. You can make only one rollover contribution to an HSA during a 1-year period.

Note.

If you instruct the trustee of your HSA to transfer funds directly to the trustee of another HSA, the transfer is not considered a rollover. There is no limit on the number of these transfers. Do not include the amount transferred in income, deduct it as a contribution, or include it as a distribution on Form 8889, line 14a.

(italics mine)

So if you transfer the money yourself, you can only do it once per year, but there are no limits to when or how many times you can instruct the old HSA trustee to transfer funds directly to the new trustee.