Question: FD to Winton Woods: I have two HSAs. Can I combine them?
A: The short answer is yes. Just as the IRS allows you to combine other types of accounts with similar tax structures (think a 401(k) and an IRA), you are allowed to transfer a Health Savings Account (HSA) into a other.
You have two different options to achieve this. One is an actual rollover where you ask one of the HSA providers to send you a check for the money in your account. Then it’s up to you to deposit that money into the other HSA within 60 days (otherwise you’ll incur penalties). The other option is a “trustee-to-trustee” transfer in which you ask one of the providers to transfer your money to the other provider. In this case, you are removed from the equation – you do not have to participate in the transfer process at all. (We generally prefer this option as there is less room for error!)
And here are some more important notes: You are limited to one HSA rollover every 12 months; but there is an unlimited cap on the number of trustee-to-trustee transfers. Also, if your HSA funds are sitting in some sort of real investment (AKA, not cash), you’ll need to check the provider’s rules regarding transfers – not all allow a transfer in this circumstance.
Here’s Allworth’s advice: consolidating multiple HSAs is usually a good idea simply for organizational reasons – it’s obviously much easier to track one account rather than two. However, just make sure you understand the type of transfer you are initiating so you are not caught off guard by confusing rules or penalties.
Q: KL and RL from Kenton County: Our daughter will be starting college in early 2023. Do we need to purchase insurance for her? We just think about everything that could happen in a dorm.
A: You never know what can happen on a college campus, do you? The first step is to check your own landlord’s policy. Some policies actually automatically have what’s called “off-premises” coverage, which would cover his dorm room. But not all policies do this. And even if your policy includes this coverage, it might not be much – usually it’s less than 10% of your policy’s benefit limit. This means, for example, that if your policy covers up to $50,000 of losses, your daughter’s property will only be covered up to $5,000.
So, with that said, you might consider buying a renter’s insurance policy for your daughter. This policy would cover the cost of replacing his belongings – laptop, phone, clothes, furniture, etc. – in the event of specific losses (such as theft or fire). It also typically includes liability coverage and additional living expense coverage. And the good news? It’s usually pretty cheap. According to the Insurance Information Institute, as recently as 2019, the average annual premium was just $174. (There is also something more specific called a dorm insurance policy which has an equally low annual premium. It is basically personal property coverage without the liability coverage or additional living expense coverage. .)
Allworth’s advice is to speak with your insurance agent to understand what type of cover you currently have and, based on your family’s needs and concerns, what other options they might recommend.
Each week, Amy Wagner and Steve Sprovach of Allworth Financial answer your questions. If you or a friend or family member has a money problem or problem, please feel free to send these questions to[email protected].
The answers are provided for informational purposes only and individuals should consider whether the general recommendations contained in these answers are appropriate for their particular situation based on their investment objectives, financial situation and needs. To the extent a reader has any questions regarding the applicability of any specific matter discussed above to their individual situation, they are encouraged to consult with a professional advisor of their own choosing, including a tax advisor and/or attorney. . Retirement planning services offered byAllworth Financial an SEC-registered investment adviser. Securities offered by AW Securities, a registered broker/dealer, Member FINRA/SIPC. Visitallworthfinancial.com or dial (513) 469-7500