HSA Accounts

[S T]

Is there an entry for the Service Fees that the HSA adinistrator charges on these accounts? And are we to record also the Interest that is paid on these accounts.

Or we simply ignore the Service Fee Charges and the Interest Credited, and only enter the actual contributions to the account? And the respective distributions?

Thanks

Sandy

[Bees Knees]

HSAs are like traditional IRAs in that contributions are deductible and earnings are tax free (or tax deferred).

HSAs are like Roth IRAs in that distributions are tax free as long as they are qualified distributions. A qualified distribution for HSA purposes is a distribution used to pay for medical expenses. A distribution that is not used to pay for medical expenses is taxable.

Distributions from HSAs are not deductible for tax purposes because the money inside the HSA is pre-tax dollars.

Fees deducted from the account are not medical expenses. However, they are not taxable because they do not show up as a distribution, but rather, and offset to tax free earnings.

[Jesse]

Just a reminder to check your state requirements. In Wisconsin we need to make an adjustment for earnings on the HSA's as there is not deduction for HSA contributions and income earned on the account is taxable income.

[S T]

HSA Fees

Thanks Bees and Jesse,
Yes Calif taxes the interest earnings as well. Too bad there are no deductions for the service fees, the fees are more than the interest earned on the accounts.

Sandy

[mactoolsix]

HSA Administrator

Sandy,
Sounds like it's time to change administrators! We have two HSA accounts, and pay zero administration fees. One with US Bank, the other with American Chartered Bank. Your client should search out free HSA accounts - many banks run "limited time specials" where you can get a free HSA account for life.

Mike