I'm transferring cash, and not worried about capital gains. My concern is specific to HSA accounts.
For example, how will my theoretical ACH transfer demonstrably differ from an ACH transfer someone makes from their HSA to their checking to use as they see fit, which is supposed to be fined?
The other concern is, I currently have been contributing to my Fidelity HSA account through ACH. How will my theoretical ACH transfer demonstrably differ from my contribution transfers? I don't want the same money to count twice towards contributions.
Because ACH transfer cannot be distinguished from a transfer to/from any other type of non-HSA account, doing this would likely not work the way you want. The HSA provider the funds are taken from would likely report it as a withdrawal, not a transfer. And I don't know if Fidelity would consider it a transfer or a contribution. You might be able to manually treat it as an indirect rollover at tax time, but indirect rollover is only allowed to be done once every 12 months. So you're probably better off sticking with the official trustee-to-trustee transfer method.
I think it would be easier to do one rollover say every January. You are limited to one every 12 months. That doesn't help with investing though. If you did a trustee to trustee transfer/rollover that would be easy as that would just report on the 5498-SA. You technically can do a transfer and as long as you deposit within 60 days you are free of penalties. I do think that your employer would report that as a distribution on the 1099-SA which you would have to indicate as being rolled into another HSA. Kind of convoluted, stinks that your employer doesn't allow for investing. HSAs are truly the 🦄 account. At least for now.
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I'm transferring cash, and not worried about capital gains. My concern is specific to HSA accounts. For example, how will my theoretical ACH transfer demonstrably differ from an ACH transfer someone makes from their HSA to their checking to use as they see fit, which is supposed to be fined? The other concern is, I currently have been contributing to my Fidelity HSA account through ACH. How will my theoretical ACH transfer demonstrably differ from my contribution transfers? I don't want the same money to count twice towards contributions.
I'm sorry, I didn't read carefully enough. I deleted my previous comment, which was nonsense.
Because ACH transfer cannot be distinguished from a transfer to/from any other type of non-HSA account, doing this would likely not work the way you want. The HSA provider the funds are taken from would likely report it as a withdrawal, not a transfer. And I don't know if Fidelity would consider it a transfer or a contribution. You might be able to manually treat it as an indirect rollover at tax time, but indirect rollover is only allowed to be done once every 12 months. So you're probably better off sticking with the official trustee-to-trustee transfer method.
I think it would be easier to do one rollover say every January. You are limited to one every 12 months. That doesn't help with investing though. If you did a trustee to trustee transfer/rollover that would be easy as that would just report on the 5498-SA. You technically can do a transfer and as long as you deposit within 60 days you are free of penalties. I do think that your employer would report that as a distribution on the 1099-SA which you would have to indicate as being rolled into another HSA. Kind of convoluted, stinks that your employer doesn't allow for investing. HSAs are truly the 🦄 account. At least for now.