The Finance Buff

HSA Transfer To Saturna Brokerage Services

by on 45 Comments

When I did the paperwork to move part of my IRA from Vanguard to a credit union, I also did the paperwork to move my Health Savings Account (HSA) to Saturna Brokerage Services. My previous HSA provider requires a minimum balance in a low-yielding savings account or else there would be a monthly maintenance fee. By moving to Saturna I’m able to invest everything in the HSA with no maintenance fee.

Unlike some other providers who offer a savings account and a linked investment account, Saturna Brokerage Services offers the HSA in a pure brokerage account. The brokerage account is serviced by Pershing, which is part of Bank of New York Mellon.

The commission schedule is very straight forward, basically $15 per online trade for mutual funds and stocks or ETFs; add $10 fee for some funds such as Vanguard. Dividend reinvestment is free for mutual funds; $1 per event for stocks or ETFs.

Among index funds, Vanguard Admiral Shares funds and Fidelity Premium Class funds are available. For some reason the all-in-one Fidelity Freedom Index Funds are not available. You can buy a Vanguard Target Retirement fund instead.

If you contribute once a year and you only make one trade, you just pay $15 (or $25 if you buy a Vanguard fund). As long as you make one trade per calendar year, there is no account maintenance fee, or else there would be an inactivity fee.

Saturna has all the forms necessary to open the HSA and transfer your existing HSA on its website. I sent them these in one big envelope:

  1. Brokerage account application
  2. A copy of driver’s license
  3. HSA Application form
  4. IRS 5305-B form (included in the HSA application PDF above)
  5. HSA Transfer form (included in the HSA application PDF above)
  6. A copy of the account statement of the current HSA to be transferred
  7. Online Account Access Form
  8. Electronic Funds Transfer/ACH form, to link the HSA with a checking account

The brokerage account application form is very long, but it’s still not that bad. I selected Retirement in Step 1, Hold and FDIC Insured Deposit in Step 7 for the sweep option, and Credit in Step 12 for how to receive interest and dividends.

Before I put the forms in the mail, I sold everything in the investment part of my HSA and I moved the money back to the savings account part. Ten days later, I saw the savings account was closed. Another few days later I saw the money in the Saturna brokerage account.

Other than the time spent on filling out the forms, the transfer process went smoothly without any intervention.

Operation-wise Saturna is a bit old school and white glove, which some people may actually prefer. After the account was set up, when I called them for a question, someone picked up on the first ring. There is no checkbook or debit card for the HSA. After you link your checking account to the HSA for ACH transfers, you still don’t see it online. To actually move money into or out of the HSA, you call them or send them a letter. They will do it for you. Because I only contribute once a year and withdraw once a year, doing it by phone or by mail works for me just fine.

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Comments

  1. Harry,
    Once you have an account, is there a list of the expenses associated with the available NTF mutual funds, or must the user look at each prospectus (or M* for the ticker) to determine this? I looked at Saturna and at Pershing, and could only find a list of expense ratios for the multitude of cash funds Pershing fronts, not for the mutual funds that hold other asset classes. Hopefully, as a member, you have access to more convenient information.

    Reply

    • No, the online access only lets you place orders or see your account balance and holdings. If you want NTF funds, set “Brokerage Availability = Pershing FundVest NTF” in the Morningstar fund screener.

    • Harry – are you sure about all the Pershing FundVest NTF funds (listed at M*) being available NTF at Saturna?

      M* shows 4256 share classes (1872 distinct funds). The list at the Saturna site seems to have nearly 1000 tickers. Not bad, but not close, and from a relatively small number of families.
      https://www.saturna.com/saturna-brokerage-services/fundvest-focus-fund-list

      Picking a fund at random: Brandes International Small Cap A (BISAX) is not on Saturna’s FundVest Focus NTF list, but M* reports it as available via Pershing FundVest NTF.

      The funds on Saturna’s list are from these families (mostly the usual suspects, though T. Rowe Price is unusual and nice to see):

      Alger, American Century, Appleseed (1), AQR, Ariel, Aston, Baron, Buffalo, Can Slim (1), Century (1), Chase (2), Doubleline, Dreyfus, DWS, Federated, Gabelli, Glenmede, Guggenheim (Rydex), Guiness Atkinson (4), Harbor, Harding Loevner (5), Intrepid (4), Invesco, JPMorgan (3), Loomis Sayles (5), Mainstay (1), Managers, Matthews, Motley Fool (3), Muhlenkamp (1), Needham (3), Neuberger & Berman, Parnassus (6), Pax World (5), Permanent (4), Perritt (2), PIA (1), Pimco, Portfolio 21 (1), Profunds, Royce, T. Rowe Price, TCW, Third Ave (4), Tocqueville, US Global, USAA.

    • It appears FundVest Focus is a subset of FundVest. There’s also a FundVest Institutional program and a FundVest Offshore program. Morningstar does not narrow down to FundVest Focus. I would further filter with ‘no load’ and minimal initial purchase <= $10k.

  2. Harry, are you referring to ELFCU having a monthly maintenance fee? I have $0 in the account and every month I just see a $4 fee and $4 waiver. Am I missing something?

    Reply

    • Maybe their current computer system can’t take your account balance negative and it’s not worth collecting from you separately. It can be fixed if they really want to. The right thing to do would be leaving $48 in the account every year to cover the fees you agreed to.

    • I’m in the same boat. My cash account has a zero balance, and so they waive the fee every month. I was disappointed when they announced the monthly low-balance fee shortly after I moved my HSA to Elements. The fact that they cannot, or choose not to, collect the fee somehow was another surprise. I assume that some day they will either implement a collection mechanism or make me move my account. In the meantime, I’m getting something for free that I don’t deserve. I guess in Harry’s view I am a predatory customer. I’ll have to ponder that.

  3. So to avoid the additional $10 going with Vanguard, I could do something like T. Rowe Price Retirement 2050 (TRRMX) instead of Vanguard Target Retirement 2050 Fund (VFIFX), for example, but I’d need to consider that against the T. Rowe Price commission schedule and slightly higher expense ratio. On second thought, I’d probably just keep my life simple and pay the extra $10 to go with Vanguard.

    You’ve got me thinking I should drop HSA Bank for Saturna Brokerage Services. I currently do VTI in the TDA HSA as part of my portfolio, but as time goes on, I like the simplicity for my family of extreme hands-off Target Retirement funds in all of my tax-advantaged accounts.

    Reply

  4. I Just opened up a Saturna HSA the other day after reading great things about it on the BogleHeads foum. Coincidental that I saw this post today. Like you, I’ve been very pleased so far. Like you, I plan on using the HSA as a Trad-IRA and not reimburse myself medical expenses.

    What system do you have for storing your medical receipts along the way? I need to develop a good system. Probably scan and save to Dropbox, but it seems onerous and that I’ll likely to forget scanning receipts.

    Reply

    • Thanks for the link. The comments, along with your writings, on the page you linked to were great. I’m new to the HDHP, so I’m hoping my provider gives me a nice clean annual statement as some of the people on the other link indicated. As a result, saving receipts becomes redundant to the annual statement, and the process is much more streamlined and defensible. Whether this opens me up to audit risk down the road is another question, but for now I think the tax benefits outweigh this for me.

  5. I moved my HSA to Saturna earlier this year. Like you said it is a bit old school but I couldn’t be happier. From my research it definitely had the lowest in fees. The only thing I wish they had was the ability to write cash covered put options. (They do have an option for covered calls)

    Regards,
    MrStockFox

    Reply

  7. Unless you specifically want a brokerage account for your HSA, there are plenty of places that offer no-fee HSAs (with moderately ok rates). For instance, Lake Michigan Credit Union offers a totally no-FEE HSA (until the time you want to close it, when there’s a $35 transfer fee, no fee if they send the check directly to you), which currently pays 1% (used to pay 2%, but just lowered it). There are other places as well, like Connexus which pays up to 1.5% (depending on balance) or Alliant (which is now at 0.65%, but fee free).

    I absolutely refuse to put my HSA money anywhere where there are fees (at least for a normal HSA savings account). I thought about an HSA brokerage account for a while, but decided against it; almost seemed like too much trouble for the amount of HSA funds I have (about $12k). I won’t be on HSA plans anymore in the future, and even if 1% or 2% is less than the rate of inflation, I still got the nice tax writeoff in the initial year, and no fees involved. I have all of my Roth IRA in mutual fund/ETF investments (not a lot, unfortunately) and for taxable money have it divided between some investments, and plain CDs (like the 3% Northwest Federal last year).

    But yeah, unless you want to specifically invest your HSA money, there ARE plenty of options for totally Fee-Free HSA savings accounts. You just have to look around…

    Reply

    • HSA contribution limit comes to about 60% of the IRA contribution limit. IRAs are typically invested. It follows that the HSA would be invested as well. No reason to leave it in 1% savings just because the account’s name has the word “savings” in it. So yes, I specifically want to invest the HSA money.

    • Harry,
      I stongly disagree that all your HSA money should be invested, no matter what your age. The reason is simple and that is because how your money is invested should track with the purpose of the funds and the time frame you might need them. Since we can never know when a large health expense can come due in which you might (or need to) use your HSA money, you should keep some of the money in cash.

      As you know from recent history it is quite possible that investments can go nowhere or even be negative over any 10 year period. Furthermore you may not have more than a 1 year notice that this large expense is coming and in that case your account could be down by as much as 37%.

      Maybe you think you will cover this large expense with your after-tax emergency fund, but that IMHO wastes the value of the HSA money, which is to spend it on medical expenses.

    • FinancialDave – I don’t invest _all_ my HSA money. I only invest the leftover after covering the medical expenses from the current year contributions. See HSA Money: Cover Expenses Now or Let It Grow? Some people do invest 100% in order to take more advantage of the tax deferral. The value of the HSA money isn’t wasted. They just reimburse themselves later because there’s no time limit for it.

    • “As you know from recent history it is quite possible that investments can go nowhere or even be negative over any 10 year period. Furthermore you may not have more than a 1 year notice that this large expense is coming and in that case your account could be down by as much as 37%.

      “Maybe you think you will cover this large expense with your after-tax emergency fund, but that IMHO wastes the value of the HSA money, which is to spend it on medical expenses.”

      You may not have any notice of a large medical expense (e.g. hit by truck, massive stroke, etc.), let alone a one year notice. So let’s grant that you want to have enough cash available to handle a large medical expense at a moment’s notice.

      You probably wouldn’t keep that much cash in your IRA (and rely on a hardship exception to withdraw the money). Rather, between an IRA and a taxable account, one would rather keep that cash in the taxable account. Likewise, one would rather keep the cash in a taxable account than an HSA.

      One wouldn’t be “wasting” the value of the HSA. Given a medical expense, one can withdraw the HSA money anytime in the future and “apply” it toward that medical expense. Cash is cash – you don’t have to literally spend the HSA money on the expense, you just have to be able to show that you had medical expenses equal to (or greater than) the money withdrawn. In case the market is down, that gives the HSA investment the time it needs to recover.

  8. I moved mine to Saturn Brokerage last year and will continue to do the annual move from my current employer’s HSA account to Saturna. I was hoping that ELFCU/Elements would undo the fees they introduced or some other HSA brokerage would come up with no monthly fee, but that didn’t happen. So now I’m at Saturn Brokerage Services.

    Reply

  9. So I think I’ll only be in HDHP for this year, would it still make sense to open a Saturna account?
    If I don’t have future money coming in, I’d have some difficulty making 1 transaction a year wouldn’t I?

    EDIT: Actually, the inactive fee is $25 a year, still lower than any other option even if I make no trades. So still a no brainer, right?

    Reply

    • Inactivity fee is reduced to $12.50 if you only have mutual funds. You decide. If you just put the money in one fund and never trade or take withdrawals, we are talking about a difference less than $50 a year between different places.

  10. By different places, I assume you mean Elements or HSA Bank?

    It would be nice to have the freedom to trade, but I wouldn’t with a high cost basis. Unless they have free ETFs..

    Park at Saturna mutual fund is reasonable option, but their fund offerings look poor.. about 1% ER? Is that worth the $50 a year savings?
    Maybe pay the extra inactivity fee and just leave in an ETF?

    Reply

    • If you decide to use Saturna just pay the inactivity fee and leave it in a Fidelity or Vanguard mutual fund or ETF.

      In comment #2 above, other readers said Elements waives the $4/month fee if your savings account has a zero balance, probably because they don’t know how to take it negative. I don’t know how long it will stay that way.

  11. “Among index funds, Vanguard Admiral Shares funds and Fidelity Premium Class funds are available. … You can buy a Vanguard Target Retirement fund instead.”

    Where can I see what Vanguard funds are available? Can I buy any VG fund I wish or only certain ones?

    Thanks for a great article; &; perfect timing for me

    Reply

    • You just type the symbol of the fund you want to buy. If the fund shows up it’s available. I haven’t tried all the symbols but I believe all Vanguard funds are available.

  12. I saw the below elsewhere & the situation is very much like mine so I would appreciate any comments from Finance Buff contributors

    Here is my situation that I am hoping some of you will comment on.
    This coming year I will be able to invest my HSA funds in something a little more aggressive than where it is now, Ally Bank money market earning 1%.
    Ally Bank doesn’t have any decent investing products, so I am comfortable switching my HSA to Saturna.
    My goal is to use the HSA as an investment vehicle rather than for medical expenses but aside from my 4 months of emergency fund before my 3-month-wait disability insurance policy kicks in, I do not have funds elsewhere to meet the worst-case scenario catastrophic year-end medical expense, meaning that feasibly I could indeed be forced to tap the HSA. Also meaning that the HSA funds should be kept in a conservative environment.
    I have decided that a bond fund suits me to invest my HSA money, specifically an ETF (VTIP) Short-Term Inflation-Protected Securities ER 0.08%, no minimum investment
    Do you have an opinion on how different VTIP would be from what I currently have, money market earning 1% at Ally Bank? In other words can I expect VTIP to outperform 1%? Of course none of us know the future but I’m wondering if it is even worth the hassle to move my HSA from Ally Bank to Saturna just because Saturna offers better investment options just so I can buy VTIP at Saturna?
    But here’s the other part of my issue: I am comfortable considering my HSA as part of the “bonds portion” of my total portfolio. This means that buying VTIP in my HSA will allow me to take the same amount VTIP OUT OF my SEP IRA and put it INTO a (hopefully) higher earning stock fund in my SEP IRA; this amount I am talking about is only in the range of about 3% of the total portfolio, so not that significant but not to be ignored either.
    Any comments on HSA funds earning
    1% in the money market
    versus
    VTIP + allowing the same dollar amount to be invested in a stock fund in my SEP IRA.
    Thanks

    Reply

    • I expect VTIP to have a higher return than Ally Bank savings account over time but not every year. It’s possible when you need to tap your HSA it happens to be a year VTIP does worse. However, if you are reducing your investment in VTIP and increasing in a stock fund elsewhere, you are really comparing the performance of a stock fund against Ally Bank savings account. The same applies, only more so: higher return over time, but not every year.

  13. At Elements Financial, they waive the minimum investment amount for many Vanguard index mutual funds (e.g. VFINX, VTSMX) which otherwise typically has a $3000 minimum investment. Do you know if Saturna will waive the minimum investment amount? Since I start my HDHP plan effective this March, I can only invest $2833 for year 2016 (pro-rata for 10 months).

    I suppose my other option is to invest in ETF Vanguard Total Stock Market (VTI), and do manual dividend reinvestment at $1 per event. I don’t like the idea of potentially leaving uninvested cash since ETF requires buying whole shares. But I’m unfamiliar with ETF investing and hence strategies on how to handle such scenario. Any tip would be appreciated. Thank you.

    Reply

    • I don’t know. You can buy Fidelity funds, S&P 500 (FUSEX) or Total Market (FSTMX), with only $2,500 minimum and $10 lower in commission. Dividend reinvestment is free for mutual funds.

  14. Thanks so much, Harry. I appreciate the helpful info on the Fidelity funds, which I plan to go for now. Since there is the ~$15 fee per online trade, does this mean I must leave at least $15 in the HSA account uninvested, for the sole purpose of paying the fee? Would greatly appreciate your clarification on this. Thanks in advance.

    Reply

    • When you place the order, the commission is included in the total. If you have $2,833 in the account to invest, set the order amount to $2,818. After the trade executes you will have $2,818 worth of fund shares and no cash left. Next year the same thing. After you contribute, set your order amount to whatever you have in the account minus $15 for the commission.

  15. Thanks, Harry. At first I had thought maybe I could deposit the $15 (for commission) in addition to the maximum HSA contribution allowed (in my case, $2833). But I see per your explanation that the commission must be included within the total of my max allowed HSA contribution. It makes sense now. Thank you very much.

    Reply

  16. Hi Harry,

    As of yesterday they started charging an extra $10 for Fidelity funds such as FSTMX or FUSEX (as they did with Vanguards). I just found out today as I was about to purchase into Fidelity funds. Do you know of any other similar 500 Index or Total Stock Market Index funds available per Saturna/Pershing without that extra surcharge? If you do, please let me know. I would greatly appreciate it. Thanks!

    Reply

    • I tried entering a buy order for $2,500 in FSTMX and FUSEX, it still showed $14.95 commission and $0.00 fee, whereas a $3,000 order in VFINX showed $14.95 commission and $10.00 fee. You can also try the Schwab S&P 500 fund SWPPX.

  17. Hi Harry, thanks for the reply. Yes, I tried the same thing for FSTMX and it showed $14.95 commission and $0.00 fee, but after I submitted order, nothing showed up on pending order section. I had purchased in the amount of my HSA contribution minus $14.95. After I called Saturna brokerage, they told me it likely failed because just yesterday Fidelity funds have an added $10 surcharge. Thanks for the Schwab fund suggestion! I will go for that fund. (But if it also requires extra surcharge, I might as well just go for Vanguard. 🙂 )

    Reply

  18. Hello, thanks for this informative page and comments. I just mailed in my paperwork to open a Saturna Brokerage account today. Once opened, would a target date fund make sense for this account? Second, in researching the available funds, what low ER funds are there that dont have the $10 surcharge? Aka what is there other than Vanguard (and now seemingly Fidelity)? Charlese Schwab? Anything Else?

    Reply

    • The Schwab Target Index Funds are available without the $10 surcharge. When the balance is relatively small you can just buy one individual index fund such as the Schwab S&P 500 fund (SWPPX) or the Schwab Total Stock Market Index Fund (SWTSX) and diversify elsewhere.

    • Just wanted to share in case it’s helpful – I spoke with the Representative over the phone. They said that Charles Schwab funds will also have that additional $10 surcharge later in a few months this year, which means then that this $10 surcharge will continue next year. I went with a Fidelity fund because the Rep said she could waive the $10 surcharge for me this year, since the change was recent and I had been told previously there was no surcharge.

    • Jess – Thank you for that info. There’s also a Northern Stock Index Fund (NOSIX), which tracks S&P 500 with 0.1% expense ratio. Or we will have to just pay the $10 or buy an ETF.

  19. Looks great for low cost buy and hold HSA investing.

    My only concern: Saturna is a small company. Uses Pershing (Mellon sub) as clearing agent. What’s the worst case if they close or have some accounting irregularity?

    Reply

    • You transfer your assets to somewhere else or if they used your assets illegally you make a claim with SIPC.

  20. Harry: When you refer to the $10 surcharge for Vanguard “funds,” does this mean mutual funds only? It seems bizarre to me to charge a higher brokerage fee for an ETF just because it was created by a particular company. Mutual funds involve administrative hassles, so I can understand an extra fee if the provider is low-cost and doesn’t provide any kickback. But an ETF is an ETF. I realize it’s only ten bucks per trade, but I just want to understand the true total expenses if I switch. Thanks.

    Reply

    • Yes open-end mutual funds only, now expanded to Fidelity funds as well. No surcharge on any ETFs.

  21. Hello Harry,

    I’m a bit confused about this article. This was a trustee to trustee transfer, right? Because I’m planning to do a rollover on my own (based on another your article), and already requested a distribution from my HSA custodian and they sent me the available funds. Now I would like to rollover the available funds to Saturna. I downloaded the forms and I’m realizing that some of the steps you described in this article are not needed for the rollover. So, my question is about the type of this HSA transfer?

    Reply

    • What I described here was a trustee to trustee transfer. For a rollover, after you open the account, you just mail in a check with a letter saying please accept this rollover contribution. I heard they sometimes ask for a printout showing the distribution from your previous HSA. So you might as well include it.

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