For various reasons, such as high maintenance fees and poor investment options, you may want to rollover the funds in your current health savings plan to another HSA. To perform the rollover, you will need to consult with the custodian that holds your current account.
Contacting the Custodian
Only Internal Revenue Service-qualified custodians or trustees can open HSAs. The custodian is the financial institution that offers the plan, such as a bank, credit union or insurance company. If you got your plan through your employer, your HSA is still held by a custodian. For instructions on rolling over your HSA, contact the custodian for your current account. If your employer sponsors your plan, contact your human resources department or plan administrator.
A rollover should not be confused with a transfer. With a transfer, your old provider sends the funds to be deposited into your new account to the new provider. With a rollover, the old provider pays you directly -- you are responsible for sending the money to the new provider.
Request a Distribution
Follow your custodian's instructions for requesting a distribution of your HSA funds. You might be allowed to fill out and submit the distribution form online. Otherwise, you typically can mail, fax or drop off the form. Generally, you must include identifying information on the form, such as your address and Social Security number, plus the amount you want paid out to you. This amount can be the full amount, or a partial, amount of your balance. Your bank might be able to put the money straight into your bank account, or it may send you a check.
You can request only one rollover for the year. You also have 60 days from when you received the distribution to deposit the funds into your new HSA. If you fail to meet the 60-day deadline, your distribution will be subject to income taxes and a 20-percent penalty.
You can request only one rollover per year.
Complete the Contribution Form
You must already have an HSA established with the new provider in order to request a deposit of your rollover funds. You may need to fill out a specific form authorizing your new provider to make the deposit. Generally, you must enclose your rollover contribution with the form.
Unlike rollovers, transfers from one HSA to another HSA can be made multiple times throughout the year. Transfers also are not subject to taxation. While you can do a rollover on your own for free, some providers charge a fee for transfers.
Closing Your Account
Your old provider's rollover distribution form may have an option for you to close your previous HSA account. If not, call the provider and request that it close the account.