HSA rollover done properly

[schildi]

Hi all!
I am looking of opening a second HSA account and "rolling over" a portion of my company sponsored HSA. So I will keep my original HSA, and my payroll deductions would still be deposited there.
After opening the new HSA, my plan is to simply write a check over say $10,000, and have that deposited into the new HSA, witch a not attached that it's a rollover. That's the advise I got from the new HSA's customer service.
I am aware that I can only do this once every 12 months.
On the tax return for 2014, it would then just have to be entered as a rollover - out of one HSA, into the other. At least, that is my understanding.

Any problems here before I go ahead and do this? Or is it really just that simple?

Thanks a lot for any responses!

[mwcpa]

why would you want 2?

2 sets of fees?

2 sets of paper work?

From IRS, publication 969

"Rollovers

A rollover contribution is not included in your income, is not deductible, and does not reduce your contribution limit.

Archer MSAs and other HSAs. You can roll over amounts from Archer MSAs and other HSAs into an HSA. You do not have to be an eligible individual to make a rollover contribution from your existing HSA to a new HSA. Rollover contributions do not need to be in cash. Rollovers are not subject to the annual contribution limits.
You must roll over the amount within 60 days after the date of receipt. You can make only one rollover contribution to an HSA during a 1-year period.

Note.

If you instruct the trustee of your HSA to transfer funds directly to the trustee of another of your HSAs, the transfer is not considered a rollover. There is no limit on the number of these transfers. Do not include the amount transferred in income, deduct it as a contribution, or include it as a distribution on Form 8889. "

[schildi]

Feb 20, 2014 6:03:43 GMT -5 mwcpa said:

why would you want 2?

2 sets of fees?

2 sets of paper work?

From IRS, publication 969

"Rollovers

A rollover contribution is not included in your income, is not deductible, and does not reduce your contribution limit.

Archer MSAs and other HSAs. You can roll over amounts from Archer MSAs and other HSAs into an HSA. You do not have to be an eligible individual to make a rollover contribution from your existing HSA to a new HSA. Rollover contributions do not need to be in cash. Rollovers are not subject to the annual contribution limits.
You must roll over the amount within 60 days after the date of receipt. You can make only one rollover contribution to an HSA during a 1-year period.

Note.

If you instruct the trustee of your HSA to transfer funds directly to the trustee of another of your HSAs, the transfer is not considered a rollover. There is no limit on the number of these transfers. Do not include the amount transferred in income, deduct it as a contribution, or include it as a distribution on Form 8889. "

mwcpa, thanks for your response!
To answer your questions why I want 2 ... I really don't, but I do not have a choice.
Both HSA's have no account maintenance fees. Actually, the current one that is sponsored through my employer does have a fee, but it is paid by my employer. So no account maintenance fee for me on either one.
Now, I can answer the question on why I "need" 2 HSA's in two steps:
(1) why do I NOT want to close my current HSA: it is the only one my employer lets me deposite payroll deductions into, meaning my only way to avoid medicare taxes on the contributions. My employer also deposits a small amount into my HSA, and will only do that to the one my employer sponsors. So no way to close that account.
(2) why do I want a second HSA: the investment options in my employer sponsored HSA are all high fee managed funds. Plus, there is a monthly fee to invest in funds. Plus the cash balance in the HSA earns a measly 0.15% interest. With the new (second) HSA I get: no fees of any kind, 1% interest on the cash balance (not much but > 6x the yield in my current HSA), free access to TDAmeritrade investments, including 100+ no transaction fee ETF's.
Hope this makes sense.

Now back on topic: I really was just wondering how to make sure the rollover is done correctly. The issue of 2 HSA's has been thought through already. Unless you see an issue with my reasons above. I'd appreciate if you'd let me know!
BTW: I am trying to avoid a transfer because of the possibility of problems and the fees that are involved. Like the current HSA administrator closing my account because of a transfer. On top, a transfer comes with its own fee, and presumably will take much longer than a check deposit.
Hope this makes sense!
Thanks for any feedback!

[mwcpa]

it is my nature to ask why a lot.... I am not a tax "preparer," one who just looks at the tax aspects of things.... tax is a cost of a transaction, it is not the entire part of such.... I see you have thought out why you are doing something, I see too often that people do things just to avoid tax.... and until we have a tax rate that is greater than 100% tax only moves make zero sense...

Your plan, from a tax stand-point works.... as long as it does not cause issue with your boss.... but you can only do it once a year....

[schildi]

Thanks, mwcpa. Appreciated!