Hsa

[Bird Legs]

Client, single, sole proprietor, files Sch. C, no employees.
Client has been talking with the credit union regarding HSA. The credit union
has one set up and client is thinking about signing up, effective 1/1/06.
Client is over 50 and under 65.
This account will pay 2% interest on the balance in the account.
Will this interest be taxable to client?
Can client make contributions to the plan anytime during the year or just
specific times? What would be the latest date client could make a contribution
for the year 2006?
Thanks

[BP.]

Hsa

Hi Bird! Earnings in the HSA are not taxable. Contribution deadline up to April 15 of following year. www.hsainsider.com has lots of good info.

[Jesse]

Check out Health Insurance Plan

Don't forget to make sure he has a qualifying high deductible plan and the prescription plan for 2006.

It is my understanding that for 2005 an individual can remain eligible for the HSA if benefits are received under a separate prescription drug plan or rider before the minimum annual deductible of the High Deductible Health plan is met, but for years after 2005, a Prescription drug plan is permitted only if the plan does not provide benefits until the minimum annual deductible of the High Deductible Health Plan has been met.