I've searched through the IRC and Regs as best as I can, but can't
find anything conclusive on a C Corp contributing pre-tax money to the
HSA of an owner who isn't on the payroll, but is an office and
director (no Nonemployee comp paid).
The rules for an Archer MSA (IRC § 220(b)(4)(A) limits the deduction
allowed to the amount of employee which is ?attributable to such
individual?s employment by the employer.?) are clear, but I can't find
comparable wording for an HSA.
Is anybody familiar enough with the rules to point me in the right
Thanks for the help. Now I'm stumped on the payroll treatment. It
appears that a Form W-2 will have to be issued for any employer
contribution to the HSA, but is it subject to Social Security and
Medicare tax withholding? If that's the case, the company will have to
gross up for them. Am I right?
From the W-2 Instructions to an employer:
Health savings account (HSA). An employer?s contribution (including an
employee?s contributions through a cafeteria plan) to an employee?s HSA
is not subject to federal income tax withholding or social security,
Medicare, or railroad retirement taxes (or FUTA tax) if it is reasonable
to believe at the time of the payment that the contribution will be
excludable from the employee?s income. However, if it is not reasonable
to believe at the time of payment that the contribution will be
excludable from the employee?s income, employer contributions are
subject to federal income tax withholding, social security and Medicare
taxes (or railroad retirement taxes, if applicable), and FUTA tax and
must be reported in boxes 1, 3, and 5 (use box 14 if railroad retirement
taxes apply), and on Form 940, Employer?s Annual Federal Unemployment
(FUTA) Tax Return.
You must report all employer contributions (including an employee?s
contributions through a cafeteria plan) to an HSA in box 12 of Form W-2
with code W. Employer contributions to an HSA that are not excludable
from the income of the employee also must be reported in boxes 1, 3, and
5. (Use box 14 if railroad retirement taxes apply.)
An employee?s contributions to an HSA (unless made through a cafeteria
plan) are includible in income as wages and are subject to federal
income tax withholding and social security and Medicare taxes (or
railroad retirement taxes, if applicable). Employee contributions are
deductible, within limits, on the employee?s Form 1040. For more
information about HSAs, see Notice 2004-2, Notice 2004-50, and Notice
2008-52. Notice 2004-2, 2004-2 I.R.B. 269, is available at www.
irs.gov/irb/2004-02_IRB/ar09.html. Notice 2004-50, 2004-33 I.R.B. 196,
is available at
2008-25 I.R.B. 1166, is available at
html. Also see Form 8889, Health Savings Accounts (HSAs), and Pub. 969.