Leaderboard

I just skimmed them but the quotes appear to be accurate. They changed the terminology from "plan" to "account" but if you read the intro he had two separate plans and therefore he must take RMDs separately from the two plans (but in the details they used "Profit sharing account" and "401(k) account"). If you have one plan with multiple accounts or sources I agree, it doesn't matter where the money comes from.

Either.

You may want to review IRS Publication 502, which lists items that are not deductible. Here is the information regarding Cosmetic Surgery: What Expenses Aren't Includible? Following is a list of some items that you can't include in figuring your medical expense deduction. The items are listed in alphabetical order. Cosmetic Surgery Generally, you can't include in medical expenses the amount you pay for unnecessary cosmetic surgery. This includes any procedure that is directed at improving the patient's appearance and doesn't meaningfully promote the proper function of the body or prevent or treat illness or disease. You generally can't include in medical expen-ses the amount you pay for procedures such as face lifts, hair transplants, hair removal (electrolysis), and liposuc-tion. You can include in medical expenses the amount you pay for cosmetic surgery if it is necessary to improve a de-formity arising from, or directly related to, a congenital ab-normality, a personal injury resulting from an accident or trauma, or a disfiguring disease. Example. An individual undergoes surgery that re-moves a breast as part of treatment for cancer. She pays a surgeon to reconstruct the breast. The surgery to recon-struct the breast corrects a deformity directly related to the disease. The cost of the surgery is includible in her medi-cal expenses.

My reading says it's a two pronged test: 1. subject to US courts; and 2. controlled by a US Person. US Person is defined in 7701(a) (30) United States person The term “United States person” means— (A) a citizen or resident of the United States, It would seem that an E-1 "Treaty Trader" would not qualify as a resident. So, the "control" of the trust must be by US persons, and E-1visa holder is not.

Except for mistake of fact rules - but those are different from "we screwed up."

You can't find clear guidance on it because you can't do it. I'd be very curious to learn the basis behind "We think".

Chaz, your instincts are right. Informal remarks by Elizabeth Purcell, IRS, Office of Chief Counsel at the May 2005 ECFC Annual conference confirmed that an individual who is covered by a general purpose health FSA (or HRA) will be ineligible to establish an HSA for the entire period of FSA coverage, regardless of whether such individual has exhausted his or her health FSA (or HRA) account balance. So the question then becomes does the spouse's termination from employment constitute a valid change in status event that would allow him to cancel FSA coverage midyear thereby making him/her eligible to establish and contribute to an HSA? I think the answer is no. The cafeteria plan rules for revoking FSA election are slightly more restrictive for FSA than for other benefit options and would likely not allow the employee to revoke the elections in this situation because such an election change would be inconsistent with the change in status event. Good luck.