Flex spending accounts and hsa when changing jobs
"Some of this may depend on how your employer chose to deal with your notice period.  Most employers employ you for the duration (which means you'd be covered for March on your insurance).  They could 'send you home' but pay you (in which case you're an employee for the duration still); or they could terminate you on your notice day, and give you effectively a severance equal to two weeks' pay.  That is what it sounds like they did. They should have made this clear to you when you left (on 2/23).  Assuming you work in an at-will state, there's nothing wrong (legally) with them doing it this way, although it is not something I believe is right morally.  Basically, they're trying to avoid some costs for your last two weeks (if they employ you through 3/6, they pay for another month of insurance, and some other things).  In exchange, you lose some insurance benefits and FSA benefits. Your FSA terminates the day you terminate employment (see this pdf for a good explanation of these issues).  This means that the FSA administrator is correct to reject expenses incurred after 2/23.  The FSA is in no way tied to your insurance plan; you can have one or the other or both.  You still can submit claims for expenses prior to 2/23 during your runout period, which is often 60 or 90 days. In the future, you will want to think ahead when leaving employment, and you may want to time when you give notice carefully to maximize your benefits in the event something like this happens again.  It's a shady business practice in my mind (to terminate you when you give notice), but it's not unknown. As far as the HSA/FSA, you aren't eligible to contribute to an HSA in a year you're also in an FSA, except that they use ""plan year"" in the language (so if your benefits period is 6/1/yy - 5/31/yy, that's the relevant 'year').  I'd be cautious about opening a HSA without advice from a tax professional, or at least a more knowledgeable person here."
"You don't want to set up your investment account as a savings or spending (budget) account.  There are a couple of reasons.  First, investment account balances change daily based on the market.  If you set it up as a budget account, then your budget category balances would need to have money added or removed from them daily as the market value changes.  Second, because you are investing for retirement, this money will be untouchable for many years; there is no need to include that in your spending budget. Instead, enter your monthly investment amount as an expense transaction (not a transfer to another budget account).  If, for example, you are sending $400 per month to your retirement account, just enter that as a monthly $400 expense out of your checking account, assigning it to a Retirement category.  That money then leaves your budget. If you want to see the value of your investment account in YNAB (so that your Net Worth is accurate), add the account as an investment account.  The value will not affect your budget categories, but it will affect the net worth on the ""All Accounts"" page.  Either set it up as an online account so that the balance will update automatically, or add it as a manual account and simply update the balance manually when you get your monthly statement." An important risk is that the government may decide to change the rules. For example, prior to 2011, over the counter drugs like aspirin, Tylenol, Nyquil, etc. were eligible expenses. You could use your HSA money to buy as much as you wanted. Beginning in 2011, those rules changed. Now, if you want to spend your HSA money on Tylenol, you need a prescription for it. The value of HSA dollars was diminished in the sense that the universe of eligible expenses was diminished. No one knows what the HSA rules will be in the future. What will be eligible expenses? Who will be eligible providers? What kind of compliance paperwork will be required? What kind of fees will be imposed? Personally, I'm a great believer in HSAs. I've saved in one for years. But remember that the government makes the rules regarding their use. They've changed the rules to the detriment of HSA owners at least once; I won't be surprised if it continues. "You would want to prioritize Roth and retirement over HSA. As the HSA is only for health and dental expenses, which you will always have, overfunding it will put you in a bit of a pickle for all of the life involved. For example, even if you or a loved one develop a strange & expensive ailment, the HSA will only cover the medical costs, but not any travel to specialists, hotel stays, home alterations, special vehicles, or lifestyle alterations (food, clothing). However, you will eventually stop working even if you are healthy throughout your life.  I would suggest that you treat the HSA as a part of your overall emergency fund, giving it a cap the same as you would normal non-retirement savings. Since you stated you have three young children, small and large medical expenses (such as braces, trips to the emergency room) are something that are almost guaranteed, thus having fairly large amount in the HSA would be very beneficial throughout their time with you. Once the children have left however, if you still have an overwhelming balance in your HSA, you may not want to add anymore to the HSA. Setting a cap for the HSA based off a certain number of years of deductible payments for medication would be a good place to start.  Roth accounts, whether it be within your company's 401k plan or the IRAs for yourself and your spouse, are single-handedly the best location for your money for long-term savings. Roth money grows tax-free, is immune to Required Minimum Distribution provisions, and will avoid estate escrow when going to one's beneficiaries. Even if you tap into the funds prior to age 59 1/2, you would only pay taxes on any investment growth, in addition to the 10% early withdrawal penalty. If you have established Roth IRA accounts and have an AGI that disallows you to further contribute to them, there is still a provision to get Roth funds contributed via conversion through what is commonly called a ""back door"" Roth." There are some points not covered in the other answers that I feel are important to address: In order to be eligible to contribute to an HSA, you must be enrolled in a High Deductible Health insurance Plan (HDHP).  In general, I think this is a great idea for most people (who are responsible enough to save up for medical expenses), but for a small portion it may cost more money to enroll in this type of plan, due to high recurring medical costs.  You should always weigh the costs of the related insurance plans against the benefit of an HSA. Note that once you open an account and contribute, you can use the funds at any point after that.  The eligibility described here is only regarding making new contributions to the account. This may no longer be true, but when I first started using an HSA several years back, I noticed that the fees and costs administered by the providers  were higher than I’d come to expect from, say, my IRA administrator.  At least, this was true for the accounts I found – perhaps I missed a better option. Furthermore, there was a much smaller selection of investment options available in those HSAs than in other brokerage accounts.  If you are not maxing out retirement already, it’s worth comparing fees and historical returns versus those accounts rather than assuming that the tax benefits will make the HSA a better deal. In my book, if it passes these two checks, then the HSA is a tremendous deal that is highly under-utilized. No, the situation is not different, the roll-over rules are the same. It won't be taxable (as opposed to traditional to Roth roll-over), but other than that it's the same. Whether the 401k allows rolling over or not while you're still employed - you have to check with the plan administrator (ask your payroll/HR for details). Usually, the deferred compensation cannot be rolled over out of the 401k while you're still employed. "The presenter suggested we keep records of our claims for 10+ years in paper form. This seemed to be overkill. It would be overkill if you're taking distributions regularly and you have enough valid (and otherwise unreimbursed) medical receipts each year to correspond to your distributions. However, if you are pumping money into the HSA without regular distributions, then you may need to keep receipts for a long time, possibly since the beginning of your HSA. For example: If the IRS was to audit my HSA deductions would the Aetna online claims be adequate? It's better than nothing, but it is not ideal. You need to provide proof of what you actually paid, not just what was billed. (How would the IRS know if you actually paid the bill?) So, the bill and receipt together would be preferred. Also, there are many eligible expenses for HSA that would not be covered by your health insurance and would not appear in your Aetna statements (dental work for example). Personally I have an excel spreadsheet with every eligible expense listed, every contribution and distribution I make, and a box of receipts since I opened the HSA account. Should I also archive screenshots of these claims digitally somewhere? If you have the time and diligence to do it, then it wouldn't hurt. I personally am only one house fire away from having to make a lot of phone calls if I wanted to re-build my receipts folder from scratch. I actually have ""scan my HSA receipts"" on my todo list (where's it been for years as a pretty low priority). Lastly it makes sense to spend the money in my HSA on anything eligible because you can never roll it over into a retirement account, its shaky if another person (spouse) could get reimbursed for eligible medical expenses if you die, and if you lose your receipts you may not be able to spend all of the HSA money tax free. Is this an accurate assessment or is there a reason why I should not touch the HSA money at all and wait to reimburse my eligible expenses. First off, if you are married the HSA can be transferred to your spouse. But in general, it really depends on what you would do with the money if you distributed it right away. If you need the money to pay debts, bills, etc, then it might make sense to take it, but if it would be extra money that you would invest somewhere, then you should leave it in the HSA because it grows tax free while it's in there and (probably) wouldn't if you take it out. The caveat though is that you need to find an HSA administrator that offers your preferred investment choices. As for your worry that you might lose your receipts, well, that's a valid point- but I wouldn't drive my decision based on that- I would archive them digitally to remove that concern completely. ...Should I reimburse myself from ... the HSA funds if I am not hitting the 401k limit yet? It depends. If it's a Roth 401k, all other things being equal, (you are able to choose the same investments with your HSA as you can choose in your 401K, and the costs are the same), then you are better off leaving the money in your HSA rather than pulling it out and putting it into the Roth 401k. The reason is that there is no tax difference, and once you put it into the 401K you (probably) can't touch it (for free) until you retire. With the HSA, if you could have taken a distribution but chose not to, then you can take that amount of money out anytime you want to without any consequences, just like your normal checking account. However, if you have a traditional 401k, and if taking HSA distributions would increase your cash flow such that you could afford to contribute more to the 401k, then this would lower your tax burden that year by reducing your taxable income." "Does your new job include life insurance?  Most ""professional"" positions *will*, making your old insurance a moot point.   That said, even if the answer is ""no"", **and** you really, really need to maintain some level of term life (ie, newborn kid and unemployed spouse)... You would **still** want to shop around rather than just automatically converting your former employer's plan.  ""Group"" is a nice-sounding way of saying ""the young and healthy subsidize the premiums of the old and sick""; if you're not old and/or chronically unhealthy... You can probably do better on your own." There is no distribution limit, only a contribution limit.  You can empty your HSA completely without tax or penalty, as long as the expenses are used for eligible medical expenses. In addition, you can reimburse yourself in the future for expenses that you have now, as long as you have an HSA account in place.  For example, you said that your dental bill was $3500, and you only had $3300 in your HSA, so you emptied your HSA and paid the rest from your checking account.  When you do get more money in the HSA, even if it isn't until next year, you can reimburse yourself for the $200 that you had to pay out of pocket on your dental bill.  And if you don't have enough money in your HSA this year to cover all of your birth expenses (congrats, by the way), you can reimburse yourself in a future year. Just make sure you keep good records on what the distributions were used for, in case you get audited.