Multiple Health Savings Accounts? You Have Options!

By GDI Client Services

New job. New career. New Health Savings Account (HSA). This scenario can play out often over the course of your life. The average person changes jobs 5.7 times between the ages of 18 and 24. The average is 1.9 times between ages 45 and 52.

Transfer Funds
The simplest way to reduce your HSAs to one is to complete an HSA transfer. This process is completed by your current and former HSA custodian. Because you never take ownership of the funds during the transfer, you’re allowed to complete as many transfers as you need to. You also don’t need to report a transfer on your tax return.

Roll Over Funds from one HSA to Another
You can also reduce the number of HSAs you have by withdrawing the funds from the old account(s) and depositing them into the new one. This process differs from a transfer because you’re taking ownership of the funds for a time, which means you will have to report any rollovers with your tax return. Note the following IRS requirements:

• You may complete a rollover only once during a one-year period.
• You must complete this process within 60 days of receiving your funds from the withdrawal.

If you do not complete the rollover per IRS rules, your funds could be subject to taxes and/or face a 20 percent penalty.

Spend Down One of Your HSAs
HSAs can be used for a variety of reasons. Some participants spend their funds, while others save and invest. And many of do all three. If you’re an HSA spender, you could choose to simply spend down the balance of the accounts that you no longer contribute to.
Once you’ve depleted these balances, you can close the accounts. Closing these accounts is an important step, since you could be charged service fees if they remain active.

Status Quo
You could also choose to leave all of your HSAs open. This approach could come at a higher cost to you since multiple accounts could mean multiple fees. And multiple HSAs can also mean multiple online accounts to manage and multiple debit cards to keep track of. Some participants have two HSAs – one for spending now and another for long term saving.

As always, we hope you find this information helpful. Please reach out to us at 1-800-626-3539 if you have any questions about your GDI Health Savings Account or if you are an employer interested in adding this benefit to your employees.

*The information above is not legal or tax advice. Portions of the article above are courtesy of WEX Health.