Smart Investment Ideas to Maximize Your HSA — Healthshare

Smart Investment Ideas to Maximize Your HSA

savingsMany people have questions about investment options in choosing an independent HSA administrator that allows you to purchase stocks, bonds, and mutual funds. While no HSA account offers 100% free investment options (at least not until you have a balance of at least $3,000), there are some simple ways to set yourself up to invest when initially enrolling in an HSA plan. Low fees are an important consideration until you have built up some money in your account.


If you are planning to open an HSA account and slowly fund it, we recommend that you start out using an account that charges no fees at all, no matter what your balance. When you have funded your account to $3,000, you can then review your no fee options for investing. First American Bank is a solid option, offering a standard HSA account with a small, but guaranteed, interest rate. First American does not charge any start up fees, monthly fees, or annual fees.  (They do charge a $3 monthly fee if you want a paper statement mailed (until your balance is over $2,000), but you can avoid that charge by opting to receive your monthly statement via email.)


First American also offers an upgraded account, which they call their Health Savings Plus Account.  It does have a $4 monthly fee, but offers unlimited trading with no load fees.


Another option you may want to consider, when you have accumulated $3,000 in your account, would be HSA Bank. They offer more investment options (over 11,000) than any other HSA account on the market. They do charge a $2.25 monthly fee if you have less than $3,000 in your account.  If you plan to actively trade with funds in your HSA, HSA Bank may not be the best option as they do have trading fees associated with most of their investment options.


If you plan to select a single investment option, and to leave your money there for a while, start out with First American, and take the small interest rate until you have at least $3,000 in your account. At that time, you could roll over the funds to HSA Bank and pay a one-time fee for your first investment. This way you would not incur any additional fees, unless your balance dropped below $3,000 or you made additional trades.  Strictly from the perspective of making sure you pay the least fees possible, this last option is your best route to take. Our experience with HSA Bank and First American Bank has been very positive.


To recap, there is no reason to pay any monthly administration fees on your HSA account until you’ve reached the $3,000 mark. We suggest you start with First American, and then make the move to HSA Bank once you’ve accumulated over $3,000.  When you use an independent administrator, there is no charge to roll over funds from one HSA to another.


Additional details on both of these options, as well as other HSA administrators we recommend, are available on our HSA Bank guide.


4 thoughts on “Smart Investment Ideas to Maximize Your HSA”

  1. michael says:

    Is it possible to roll money from an IRA or Roth IRA into an HSA ??
    Or for that matter any other type of account like a 401 or Mutual Fund

  2. Fred Adams says:


    You can only roll over money from an IRA to an HSA. If you do so, keep in mind that you would not get a tax deduction for the contribution, as you would have already taken that deduction when contributing to your IRA (unless it is a Roth). The only real benefit of rolling over from an IRA to an HSA is it would give you the ability to use those funds tax free for medical bills you may incur.

    If you have any other questions, just let me know.


  3. michael says:

    Thanks for the reply Fred I do contribute to my HSA But i don’t put enough in to max out my contributions The company i work for adds $400 at the start of the year and between putting money into my 401k and other things i only put in a few hundred this year this is my second year using it and i think it’s the best thing i ever did
    I have not used it yet but I kind of look at it as a good place to put money for the future The interest rate is better then any Bank
    I have a an IRA and a Roth IRA with a sizable amount of money in it was thinking maybe just moving enough at the end of the year to get close to the max
    Thanks again for any Info you can give me

  4. Fred Adams says:

    Michael, Based on the information in your last post, I would only consider funding your HSA before a 401K is if your company does not match your contribution. If they are, then you should definitely take advantage of that, it’s about the easiest way possible to instantly double your money.

    If you do consider doing a roll over from your IRA, you would have until April 15, 2015 to make that move, and still out it as a 2014 contribution. Unless you needed to money for medical bills, the best approach for most people to take would be to hold off on the roll over, just in case you find that a last minute HSA contribution may lower your taxable income either enough to drop in to a lower tax bracket or to possibly get tax credits for purchasing individual health insurance. Even if you have employer coverage now, we never know what the future has in store, and there are not many vehicles out there that can give someone as many options as an HSA contribution.

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