F.D. in Winton Woods: I have two HSAs. Can I combine them?
A: The short answer is yes. Just as the IRS lets you combine other kinds of accounts with similar tax structures (think a 401(k) and IRA), you’re allowed to roll one Health Savings Account (HSA) into another.
You have two different options to accomplish this. One is an actual rollover in which you instruct one of the HSA providers to send you a check for the money in your account. Then, it’s on you to deposit that money into the other HSA within 60 days (otherwise, you’ll face penalties). The other option is a ‘trustee-to-trustee’ transfer in which you tell one of the providers to transfer your money to the other provider. In this case, you’re taken out of the equation – you don’t have to be involved with the transfer process at all. (We typically prefer this option since there’s less room for error!)
And here are just a few more important notes: You’re limited to one HSA rollover every 12 months; but there’s an unlimited cap on the number of trustee-to-trustee transfers. Additionally, if your HSA funds are sitting in some kind of actual investment (AKA, not cash), you’ll have to check the provider’s rules about transfers – not all allow a transfer in this circumstance.
Here's the Simply Money Point: Consolidating multiple HSAs is generally a good idea simply for the sake of organization – it’s obviously much easier to keep track of one account rather than two. However, just make sure you understand what kind of transfer you’re initiating so you don’t get caught off-guard by confusing rules or penalties.