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I got a nastygram from my bank because we made >6 withdrawals from our HSA last month.

According to them, the limit of 6 withdrawals is a federal regulation. I'm familiar with this for normal savings accounts. Is this standard practice for HSA's?

They have (what seems to me) an odd structure to the HSA. It's a combination checking+savings. The checking always has a zero balance. We write checks (or use a debit card) from the checking account, and they make an automatic transfer from the savings to the checking to cover withdrawals.

It would seem to make more sense to just have it as a checking account, but maybe there's some regulatory reason they don't do this?

Do other institutions have HSAs structured so that you can make more than 6 withdrawals a month? (A month like this is infrequent but not rare -- if the kids get sick and require a couple of trips to the doctor and the pharmacy we'll easily end up hitting the debit card a few times plus a couple of checks.)

bstpierre
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3 Answers3

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Checking accounts can't pay interest, according to the bizarre and outdated Regulation Q. Under the even more bizarre and outdated Regulation D, you can only transfer money out of savings accounts six times per 4 weeks.

Your HSA account is probably set up the way it is because the bank wants to be able to tell people they'll earn interest on their savings (although I'll betcha the current rate is something like 0.000000000001%). As far as I know, there's no reason an HSA couldn't be a straight checking account. You wouldn't get interest but you would get more than 6 withdrawals per month. Or, you could do the transfers yourself from savings to checking just keep enough money in the checking part of the account so that the automatic transfer doesn't kick in.

Joel Spolsky
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As others have pointed out in comments and answers, the 6 withdrawal limit was based on Regulation D.

Banks/credit unions that offer checking-account based HSAs do exist, with no limit on the number of withdrawals (at least according to information given to me over the phone -- I didn't check the disclosure brochures).

Concrete examples (I can't vouch for any of these, just found them in my research):

bstpierre
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From my understanding all HSA accounts are going to be limited to 6 transfers a month.

Have you considered using a credit card you earn rewards on and then writing yourself a check out of the HSA at the end of the month?

stoj
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