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How to Transfer Your HSA Funds to Investments

3 min read

30 sec brief

HSAs (health savings accounts) create spending and savings options. This enables you to make the most of the triple-tax advantages that come with an HSA. It creates short-term savings for everyday health costs and dedicated long-term funds. Balancing your HSA fund allocation is a personal financial choice. We will show you a few things to keep in…

HSAs (health savings accounts) create spending and savings options. This enables you to make the most of the triple-tax advantages that come with an HSA. It creates short-term savings for everyday health costs and dedicated long-term funds. Balancing your HSA fund allocation is a personal financial choice. We will show you a few things to keep in mind when you do this.

HSA Investment vs. HSA Savings Account

Your HSA account can be further designated and allocated into an HSA savings account or an HSA investment account.

HSA investments further enhance your HSA savings by utilizing tax-free contribution growth. This means any HSA investment growth isn’t taxed, as long as the money is used for qualified out-of-pocket medical expenses. Or, you wait until 65 years of age, then you can use the funds for anything (just pay ordinary income taxes at that point- like an IRA).

Transferring HSA Money to Investments

Transferring funds from your HSA account into your HSA investment account will vary from provider to provider. At Lively, it’s as easy as one click. Once you have transferred funds into your HSA investment account, you can invest your funds into stocks, bonds, mutual funds, or EFTs.

HSA Allocation Considerations

  1. You can’t spend money in your HSA investment account – this might be obvious, but is worth point out. The money in your HSA investment account is not available to use with your HSA debit card or receipt reimbursement. You would need to transfer the money back from your investment account to your cash account. This is because your funds are invested on TD Ameritrade’s self-directed brokerage platform. You decide when you want to sell your invested positions – not Lively!
  2. HSA investments create risk – HSA investment growth is not guaranteed. This means you are accepting some risk with your HSA fund investments. If your HSA funds grow, through investments, you would have more tax-free money to use for medical expenses. You need to decide if that risk is manageable for you.
  3. Plan for the long-term – The clearest value of HSA investment is that if further designates long-term savings. You can’t access this money daily for HSA expenses. HSA investment earmarks HSA money you want for years to come.

Setting aside funds for long-term savings, with HSA investments creates a clear path to lowering your financial risk. You are investing in your health savings future. You will not be blind-sided by the growing health costs for next year or in 20 years. Planning for the unknown might seem difficult, but the strategies to get you there are as clear as day.

Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.

If you need more help with health account decisions, check out our blog. We will make you a healthcare benefits expert in no time, without any extra work or effort on your end.

Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.

About the author

Lively

We are HSA Experts! Lively is a Health Savings Account (HSA) platform for employers and individuals. A 401(k) for healthcare.

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