My HSA custodian was acquired by another custodian, and they're planning to liquidate my investments at the old custodian, and then transferring that into a money market at the new custodian. At that point, I'll have to go in and manually re-invest the cash in the money market.

Assuming I buy the same investments that I had in the old account, won't that create a situation where the sale price at the old custodian will be different from the purchase price at the new custodian?

The market is extremely volatile right now, so that could potentially mean selling low and buying high. Am I misunderstanding the situation, or is it really that unfair? Is there anything I can do to mitigate the risk?


Yes, it could mean selling low and buying high, but it could also mean selling high and buying low. There really is no way to know.

Because it is inside an HSA, there are no immediate tax implications; you don’t have to worry about paying capital gains or triggering wash sale rules as you might if you were liquidating and rebuying in a taxable account.

To mitigate your risk of the price changing, you could try to get this done as fast as possible. But again, in a volatile market, you could just as easily get lucky with your transactions. Since you don’t seem to have a choice, my advice is not to worry about it, and avoid the temptation of trying to time the market and guess the swings.

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  • That's disheartening, but thanks for the confirmation. I can see the "don't worry" perspective, but I feel like that only works in the aggregate. Sure, some people will gain and some people will lose, but the people who lose still lose, through no fault of their own. The market is up 10% today, so myself and my coworkers could lose tens- or hundreds- of thousands of dollars, depending on dumb luck, for no other reason than HealthEquity wanted to benefit themselves through an acquisition. That seems borderline criminal to me. – Ian Dunn Mar 25 at 0:54
  • It supposedly evens out, @IanDunn , so don't worry - I liquidated for the same reason on Monday night (missing yesterday!), so you are on for a gain... 8-\ – Aganju Mar 25 at 20:29
  • How does it even out? – Ian Dunn Mar 25 at 21:11
  • Hundreds of thousands of dollars in an hsa? – quid Apr 4 at 16:29
  • Across 1200 employees, yeah, that seem like a reasonable estimate to me. – Ian Dunn Apr 4 at 21:24

I've found some alternative options. Unfortunately, though, it seems like most of them won't work most of the time.

In-kind transfer to another custodian

This is where your investments are just transfered to another custodian without being sold, so they don't change at all. This is the best possible outcome IMO, because you'd be able to choose a reputable one, and you'd have control over it.

Many custodians won't do them, though. In some cases it might depend on whether or not the new custodian provides the same investments, but some custodians won't do it even if they match.

Dollar-cost-average the potential losses

You can liquidate a portion of the investments yourself, and transfer them to a new provider. If you do that 4-5 times, it would split the volatility across multiple time periods, to average out the fluctuations.

Some custodians don't allow partial transfers, though. Even if they do, some custodians only transfer the money via physically mailing a check to the new custodian, and then entire process can take 1-4 weeks. Those delays can limit the number of times you'll be able to do partial transfers, decreasing the effectiveness. That might also greatly increase the time window where your money isn't invested, increasing the risk of the purchase price being far away from the sale price.


Your HR team may have enough leverage with the custodian to convince them to make an exception for your company, and do an in-kind transfer, or reimburse you for any losses they cause, etc.

Leave your HSA with the current custodian

In my case, WageWorks was my benefits provider, and was being acquired by HealthEquity, but they partnered with BNY Mellon to be the custodian of HSAs. One WageWorks representative told me that some employers were allowing people to leave their HSAs with BNY, but BNY told me that HealthEquity wouldn't let them do that. I'm not sure who was correct, but it may be possible in some situations.

Deny consent to liquidate

Another option that a benefit provider suggested was denying consent to liquidate the investments. I'm guessing this would work similar to above, but forcing it to happen through legal means. Our HR team is looking into it, and I'll update the post when I have some definitive info.

Just let it happen

Like Ben said, doing the liquidating/transfer as fast as possible helps mitigate the risk. If the acquiring custodian can do it faster than the you could transfer to a new custodian yourself, then just letting them do it may be your least-bad option.

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  • I don't see how most of this is relevant to the question asked. You could also move the money to Fidelity which offers a $0 fee HSA to individuals, and skip the employer sponsored one. You don't need to use the bank sponsored by your employer, but your employer may only process pretax deductions to the bank it sponsors. But as with other things you list, I don't think this is relevant to the question. – quid Apr 4 at 16:29
  • I asked two questions; the second (and more important) was, "Is there anything I can do to mitigate the risk?". All of the things I listed were ways to potentially address that, while the other answer was basically, "you shouldn't care," which feels dismissive and unhelpful to me. – Ian Dunn Apr 4 at 21:27
  • I was considering transferring to Fidelity via the various methods in my answer, but none of them worked out for the reasons above. – Ian Dunn Apr 4 at 21:28
  • Right because the issue is the fact that you're holding mutual funds, this is what happens when you move mutual funds it's one of the benefits of ETFs, but this isn't unique to an HSA custodian – quid Apr 5 at 4:52
  • I prefer ETFs too, but I think blaming mutual funds is a superficial way to look at it. The reason the situation exists in the first place, and the reason that all of the attempts to avoid it failed are because of choices the custodian is making. They could have done an in-kind transfer, or stagger the transfers, or reimburse any losses, etc, but they're actively choosing to create a situation where our savings are at unnecessary risk. – Ian Dunn Apr 6 at 3:19

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