Eli Lilly Federal Credit Union (Elfcu) offers the best HSA for investing HSA money. I completed my HSA setup at Elfcu. Here’s a walkthrough of the timeline.
Day 1: I did the online application. You can join the supporting organization Tru Direction in the online application.
As it’s common in online applications, I was asked ID verification questions based on information from my credit report, such as selecting where I lived previously and where I got a car loan before.
The ID verification system cleared me without any additional steps. One reader was asked to submit a copy of the driver’s license and utility bills. Another reader was asked to visit a branch in Indiana. The ID verification system is pretty much a black box. If the system mandates certain actions, the financial institution has to do it. Blame the trouble on laws and regulations.
Register Online Access
Day 2: I received a welcome email with my member ID and account numbers. With those numbers, I registered for online access.
As many small credit unions do, Elfcu uses third-party hosted systems because they lack their own IT resources. Online banking (“eBranch”) and HSA administration are hosted on two separate systems. You register and log in separately.
You switch to paperless statements on the online banking side. You do your HSA-specific functions on the HSA administration side.
Day 3: I mailed the HSA Transfer form to Elfcu. My outgoing HSA provider doesn’t charge a transfer-out fee. If yours does, consider doing a rollover instead. See How To Rollover an HSA On Your Own and Avoid Trustee Transfer Fee.
Day 9: The HSA account disappeared from online banking at my previous HSA provider.
Day 16: Online banking (“eBranch”) at Elfcu showed a balance in my new HSA. The transfer completed.
The HSA administration side still showed zero, because it’s always one business day behind. It wasn’t possible to enroll in the investment program just yet.
Open TD Ameritrade Account
Day 17: The HSA balance showed up on the HSA admin site. I followed the instructions in the HSA welcome kit to open a TD Ameritrade account.
Make sure you copy down the TD Ameritrade account number you get at the end. You need it and the PIN you gave during enrollment to create a TD Ameritrade user ID and password. If you already have a TD Ameritrade user ID, you may want to try linking the new account number to your existing login.
After I logged in to TD Ameritrade, I enrolled in the commission-free ETF program (under Research & Ideas -> ETFs -> commission-free ETFs). I also enabled paperless confirmations and statements (under Client Services -> My Profile -> General, otherwise possibly $2 fee).
A disclosure document in the TD Ameritrade account shows a $12.50 quarterly maintenance fee. A rep from TD Ameritrade’s Participant Services told me that fee doesn’t apply to the Elfcu program.
It was not possible to transfer money to TD Ameritrade yet. The HSA admin site needed an update from TD Ameritrade for my account number.
Invest HSA Money
Day 17: Even though it said it could take up to 3 business days to complete the setup, the Transfer Money function on the HSA admin site became available to me only after a few hours. I requested to have the entire balance transferred to TD Ameritrade. The transfer would take two business days to complete.
Day 19: My TD Ameritrade account showed a balance. I placed a trade for Vanguard Total Stock Market Index ETF (ticker VTI). No commission was charged, as expected.
I was left with a little bit of cash not enough to buy a full share of VTI. I decided to leave it at TD Ameritrade. If I want I can also request to have it transferred back to Elfcu.
That’s all. It took 3 weeks to open new accounts, transfer the HSA money and invest it. It will be simpler next year.
If you are easily discouraged by filling out online forms and dealing with different systems, this is not for you. Keeping the money in the HSA chosen by your employer would be the easiest.
The next easiest would be having the HSA at a bank or credit union where you already have an account. You don’t have good investment options but you won’t have 3 sets of login, password, and security questions for your HSA either. Do this only if you really want to invest the money.
To those who have the HSA at HSA Bank or elsewhere, how does this process compare?
[Photo credit: Flickr user webbyclare]