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HSA Employer Contributions question


Guest RandalThor
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Guest RandalThor

My employer currently offers two HSA account through two different custodians. I'd like to set up my own HSA through someone else because of the investment options. My employer contributes a % and also matches that same % dollar for dollar to employee contributions. Is my employer required to contribute and match the amount in my HSA if I chose to open it somewhere else, outside of their two sponsored HSA plans? Does the Comparable contributions clause in Pub 969 take effect here? The answer I have received so far from my benefits department is that I have to open an HSA at one of the two sponsored plans if I want an HSA at all, but from my research, I think they may be wrong. Can anyone point me in the right direction? Should I print out Pub 969 and show it to them? Is there any other documentation that I can use to present my case?

Thank you very much for your guidance.

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You are allowed to set-up your own HSA account, and yes, the employer does need to contribute the same amount for you. As for your benefits department, that is your call. If you prove to them that you can open your own account, will this be a negative for you, or will they take it in stride?

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Guest RandalThor

Leevena, thank you for the note. I did meet with my benefits personnel and we did come to the understanding that I could open my own HSA somewhere else, but I wouldn't have payroll deductions before taxes to contribute. From my understanding, I could make that up when I file income taxes. Then I asked about the comparable contributions and they said that I could only receive the contributions if I enrolled in their sponsored plans. Their statement was that the company doesn't have to do these contributions. But, in my mind, now that they are, they have to be willing to contribute to everyone. I didn't push this with them, but to me that doesn't seem right or fair. We came to the conclusion that I could enroll in one of their sponsored plans, received the contributions, and then at the end of the year write a check for the entire amount and send it to the other HSA account that I would like to use. Kind of a cumbersome process, but I don't think I can push it any farther without hurting anyones feelings.

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If the HSA is established through a cafeteria plan (which it probably is), it isn't subject to the comparable contribution rules. See 26 CFR 4980G-5 Q&A 1 which states in part: "the comparability rules do not apply to HSA contributions that an employer makes through a section 125 cafeteria plan."

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Guest RandalThor

Thanks chloe, I'll take a look. I've been told that we aren't on a cafeteria plan, but that may be the case, since they do match a certain amount.

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Chloe...good point, I was not even thinking about the 125 issue.

RandalThor...the solution you have come up with, transfer at later date, makes sense. Another thought, which I assume is going to be complex and maybe not worth it. HSA plans are not subject to ERISA (which is a complex set of laws, requirements, etc.) if a variety of requirements are met, such as the HSA is voluntary and the employer does not prevent the employee from moving their funds to another HSA or influence how the investment decisions are made. If you employer does put up some type of restrictions, they would become subject to ERISA. This is just a side note and should not influence your decision. I would go with the transfer into another account. By the way, the employer cannot tell you when you can make those transfers. You could transfer the money immediatly.

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Guest RandalThor

Thank you leevena. I appreciate the thoughts/advice. Transferring immediately would be great. I'm also going to continue to suggest to the benefits team that they look at other hsa custodian/account options. I've received the employer packet from the one I'm interested in and plan on passing that along for their review. Maybe next year we'll have another option...

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