Vanguard rolls out HSAs for 401(k) participants

Vanguard rolls out HSAs for 401(k) participants
The record keeper joins a handful of its peers in making health savings accounts more broadly available.
NOV 15, 2018
Vanguard Group will start offering health savings accounts to its defined-contribution-plan clients, the retirement-plan record keeper and asset manager announced Thursday, capitalizing on the increased popularity of HSAs. Vanguard, the largest manager of DC-plan assets, is partnering with the custodian HealthEquity to provide HSAs to 401(k) plan clients. The company will give plan sponsors the choice of using Vanguard investment funds or the funds in their current 401(k) lineup. A handful of other large record keepers also offer HSAs to 401(k) customers, including Fidelity Investments and Empower Retirement, the latter of which entered the fray early last year. Fidelity also made its HSAs more widely accessible last year — it had previously offered HSAs only to companies with more than 2,000 benefits-eligible participants, but reduced that threshold to 50 employees. Vanguard, similar to its peers, is launching the service in a bid to give participants a "more complete picture of their retirement readiness," said spokeswoman Emily Farrell. Assets in health savings accounts have increased steadily over the past several years. Devenir Group, a consulting firm, estimates there will be $54 billion in HSAs by year-end, a 46% increase in two years. It projects HSAs will hold $74.7 billion by the end of 2020. The number of account holders is also increasing — there were more than 23 million accounts open as of mid-2018, up from 18 million at the same point in 2016, according to Devenir. "I think it speaks to the popularity of HSAs," Matt Gulseth, partner at Channel Financial, said of Vanguard's push into the market. Retirement plan advisers have eyed HSAs as a way to offer more services and expertise to their 401(k) clients. Advisers see them as an important retirement savings vehicle because of their triple tax advantage — tax-free contributions, growth and distributions if used to pay for qualifying medical expenses. A retirement-age client can also tap an HSA for non-medical expenses and only incur income taxes, similar to a 401(k). Read more: Which should investors choose: a 401(k) or an HSA?  "I think most advisers should be aware of the interplay of an HSA account as a potential savings vehicle," Mr. Gulseth said, due to their increased availability through record keepers.

Latest News

SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees
SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees

Eliseo Prisno, a former Merrill advisor, allegedly collected unapproved fees from Filipino clients by secretly accessing their accounts at two separate brokerages.

Apella Wealth comes to Washington with Independence Wealth Advisors
Apella Wealth comes to Washington with Independence Wealth Advisors

The Harford, Connecticut-based RIA is expanding into a new market in the mid-Atlantic region while crossing another billion-dollar milestone.

Citi's Sieg sees rich clients pivoting from US to UK
Citi's Sieg sees rich clients pivoting from US to UK

The Wall Street giant's global wealth head says affluent clients are shifting away from America amid growing fallout from President Donald Trump's hardline politics.

US employment report reactions: Overall better than expected, but concerns with underlying data
US employment report reactions: Overall better than expected, but concerns with underlying data

Chief economists, advisors, and chief investment officers share their reactions to the June US employment report.

Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading
Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading

"This shouldn’t be hard to ban, but neither party will do it. So offensive to the people they serve," RIA titan Peter Mallouk said in a post that referenced Nancy Pelosi's reported stock gains.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.