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HSA Contributions

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Final regs provide excise tax guidance on comparable HSA contributions under 2006 law.

IRS has issued final regs that provide excise tax guidance under Code Sec. 4980G on employer comparable contributions to health savings accounts (HSAs) for changes made by the Tax Relief and Health Care Act of 2006 (TRHCA). In addition, IRS has issued final regs on the return required for excise tax payments and the time for filing that return.

An HSA, a trust created exclusively for the purpose of paying the qualified medical expenses of an account beneficiary, can only be established for the benefit of an eligible individual who is covered under a high deductible health plan. An above-the-line deduction is allowed for an individual’s contribution to an HSA. Employer contributions to an HSA on an employee’s behalf are neither included in the employee’s income, nor subject to employment taxes. HSA earnings accumulate tax-free, and distributions to pay qualified medical expenses are also tax-free.

Source: RIA Checkpoint Newsstand 9/8/09

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