Dave and Katy’s Travels | An Investment, retirement, and travel blog

If you haven’t read about them, HSA accounts are the best thing thing Roth IRAs. In fact, they’re really the best account type ever created. First, they accept funding pre-tax, just like a 401k or IRA. So you can lower your tax burden by putting your max towards this account. Then you can invest these funds (using your HSA Administrator) to grow the funds over time. Finally, you can use the funds at any point, Tax Free, for any health care costs. So the money you use to fund this account is never taxed. To top it off, if you hit 65 and have way too much money in this account, you can start withdrawing your funds as income (just like a 401k/IRA account), so you’re not completely restricted.

Now, the only large issue in the above information is the “using your HSA Administrator”. Of course like 401k accounts, your HSA account needs an administrator. Due partially to how new these HSA accounts are, there don’t appear to be a large number of HSA Administrators available. According to the U.S. Treasury page on HSA accounts:

“Insured banks and credit unions are automatically qualified to handle HSAs. Any bank, credit union or any other entity that currently meets the IRS standards for being a trustee or custodian for an IRA or Archer Medical Savings Account (MSA) can be an HSA trustee or custodian.

If I am reading the above right, every single bank out there should be able to take my transferred HSA account from my employer upon termination / quitting / etc. I personally use E-trade as our brokerage of choice for roll-over IRA accounts, Roths, High-yield savings, etc. I looked through E-trades materials on their website and I didn’t see any mention of rolling over your HSA account to their platform. E-trade does have an insured Bank associated with the company, so I believe they should be capable if I understand it.

I found a supposedly complete list of HSA administrators here which appears to be a fairly short list. I’ve seen other short lists online as well. I’ve written to E-trade to ask their future plans, and to see if there is any reason they haven’t moved forward with offering to handle HSA accounts. I’ll be interested to know if there is a reason more institutions haven’t moved forward with this wonderful account type.