Multiple HSAs

[hgjjgkj]

My employer is small and not sophisticated with benefit offers. They offer an HSA through HSA Bank and provide a $500 contribution each year. I am hoping to have my HSA through BoA in order to get the loyalty benefits.  Is it allowed to contribute a small amount to my employer offered HSA, then contribute the majority to a BoA HSA during the same calendar year?

[dandarc]

Allowed, yes.  Wise - possibly not.

If you contribute to the HSA through payroll, you usually will save FICA in addition to income taxes, so that's 7.65% in extra tax savings you're leaving on the table unless you're over the social-security maximum.

All you have to do is keep all of your contributions + any employer contributions under the allowed maximum - you can fund any number of HSAs, so long as the total is under what you're allowed.

No idea what BOA loyalty benefits are worth, but be sure you know the full extent of the trade-off and act accordingly.

[hgjjgkj]

Allowed, yes.  Wise - possibly not.

If you contribute to the HSA through payroll, you usually will save FICA in addition to income taxes, so that's 7.65% in extra tax savings you're leaving on the table unless you're over the social-security maximum.

All you have to do is keep all of your contributions + any employer contributions under the allowed maximum - you can fund any number of HSAs, so long as the total is under what you're allowed.

No idea what BOA loyalty benefits are worth, but be sure you know the full extent of the trade-off and act accordingly.

I want to challenge you a bit on the fica thing. This is what I found at bogleheads:

"Tax9 Do HSA contributions reduce FICA taxes? Employer contributions to a HSA account are not wages, and therefore are not subject to wage taxes like FICA. Employees' voluntary contributions to a HSA are wages, and therefore are subject to FICA taxes. Self-employed people are not subject to FICA taxes, but pay a self-employment tax instead. An HSA plan does not help reduce the self employment tax." https://www.bogleheads.org/forum/viewtopic.php?t=151121


The further discussion in the thread muddles the waters even more. I emailed payroll to ask them about the fica implications.
Why is it that I cannot just provide the IRS with a record of my HSA contributions to BoA and then get the equivalent FICA amount back?

[dandarc]

I mean, you can search this forum and many other places.  Technically speaking, your employer has to have a Cafeteria plan or this to be true, but that is very common, so "putting in Employer's HSA via payroll deduction saves FICA, whereas doing it outside of payroll does not" is pretty much true for most people.

[dandarc]

https://www.irs.gov/pub/irs-pdf/p969.pdf

Contributions to your HSA made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income.

[TomTX]

My employer is small and not sophisticated with benefit offers. They offer an HSA through HSA Bank and provide a $500 contribution each year. I am hoping to have my HSA through BoA in order to get the loyalty benefits.  Is it allowed to contribute a small amount to my employer offered HSA, then contribute the majority to a BoA HSA during the same calendar year?

Just do it all into your employer's HSA as a payroll deduction. Let them deal with the tax side.

Unlike a 401k, HSAs are required to allow you to transfer money to another HSA provider while you are still employed. There may be a requirement to keep a certain amount in your employer plan.