Employer forcing HSA bank choice

[admin]

From what I am hearing from coworkers who took the HSA plan this yr, they are being told that they must use the bank that the employer has chosen to go through if they want the benefit of both the employer\'s contribution and the employee\'s contribution to be pre-taxed. If they choose to use their own bank for their HSA, only the employer contribution will be pre-taxed, but the employee portion will not be. Using the employer\'s choice for a bank, employees are faced with a $3.00/month service fee; using their own bank there would be no monthly fee. My question is then a 2- part one:
1. In reading your response to davegod75, is this then allowable under the HSA IRS guidelines for employers to be able to do this?
2. Is it still allowable when the employer\'s bank choice is also a bank owned in partnership by the parent company? That seems to be a huge conflict of interest to me.
Thank you for your help.

[admin]

Question 1: If your employer provides a Cafeteria 125 plan, then you will be allowed to contribute to your HSA in a pre-tax way.

Question 2: That is a good question and one that we must research. At first glance, we are not familiar with any regulations stating that an employer cannot use a bank as the custodian of HSAs if the bank is a partner with the employer.

Sorry to be vague but we will research it a bit more.

[admin]

First, thanks for reading the davegod forum dialogue as we spent quite a bit of time researching that. To your questions, yes your employer can select which banks they will make deposits too as well as whether or not they will allow you to do pre-tax payroll deductions to a specific bank. Your co-workers are correct. Also, while the monthly fee and the selection of the parent companies ownership fo the bank may be irritating, I doubt if it is a conflict of interest. It is probably more a matter of convenience and cost for them. That said, you might check to see if there is a specific balance at which they will waive the fee and if so, that could be motivation to get your HSA funded quickly. It might also give you peace of mind.....or not, if do some comparisons with other banks. Banks, as you know, are notorious for charging fees and you might find, that if the $3.00 per mo. is the only fee they charge and they have a decent interest rate, that they are actually competitive.