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This often occurs where the employee fails to timely establish the HSA with the employer’s designated custodian. It's frequently because the employee has not completed the Customer Identification Program (CIP) to satisfy requirements set forth in the USA Patriot Act. Here's a short summary on how to handle-- https://www.newfront.com/blog/employee-fails-to-establish-hsa-2 Best practice is to have a consistent policy in place to address situations for both active and terminated employees who do not take the steps required to open the HSA with the employer’s custodian. Employee HSA Contributions For employee HSA contributions, the employer must either deposit or return the employee’s salary reductions. Any reasonable administrative policy would be fine here. For example, failure to open the account within 90 days (or during the period of employment, if sooner) will result in a refund to the employee in the following payroll. That avoids the need to hold and potentially refund large amounts of employee contributions. Remember that any refund must be taxable income subject to withholding and payroll taxes. Employer HSA Contributions For employer HSA contributions, it is reasonable to have a consistent administrative policy providing that employees forfeit the employer contribution if they fail to timely open the account. For example, there will be no retro contributions beyond the last day of February of the following year. And if the account isn’t opened during the period of employment, all employer contributions are forfeited. The employer should provide employees with advance notice of the consequences of failing to timely establish the HSA. Note that although IRS guidance does not directly address these types of policies generally, there are provisions in the comparability rules providing that employers may have a policy for employees to forfeit the employer contribution if they do not establish the HSA within a set period. Although most employers are not subject to the comparability rules (in almost all cases the Section 125 nondiscrimination rules apply instead), this provision at least provides a basis for the IRS approval of this type of approach generally.

The deferral election had to be made by 12/31/2023 and the deposits for both sources made by the 2023 tax filing deadline plus extensions

True, but Terry Powers did specifically address this. From his slides: Participating Employer Plan Termination -No distributable event within the PEP -Establish new, single-employer plan -Transfer assets from the PEP to new plan -Terminate the new plan

Yes, this is a bit of a messy situation unfortunately. Enrollment in a general purpose health FSA blocks HSA eligibility (i.e., the ability to make or receive HSA contributions) for both you and your spouse. So going forward you will either want to decline your company's health FSA or direct your spouse not to make (or receive employer) HSA contributions. Alternatively, if offered by your employer, you could enroll in a limited purpose health FSA without affecting your spouse's HSA eligibility. As for this year and prior years, all of your spouse's HSA contributions for months in which you were covered by the general purpose health FSA are technically ineligible excess HSA contributions subject to a 6% excise tax each year until removed. You will want to work with a personal tax adviser to address those. Here's some more details for reference: https://www.newfront.com/blog/hsa-interaction-health-fsa-2 https://www.newfront.com/blog/correcting-excess-hsa-contributions Slide summary: 2024 Newfront Go All the Way with HSA Guide

Your understanding is correct. The problem is that there is no formal guidance on the issue. With pre-approved plans, the IRS requires the spin-off/termination. The reasoning is that distributions may be on ‘plan’ termination. So there must be a plan that is terminating, not just an employer ceasing to participate. The 2-step process seems like a waste, but it’s certainly the safest way to go.

"Can all "civil" lawsuits involving a benefit covered by ERISA be removed to Federal Court?" No. Unless the issues relate directly to benefits under an ERISA governed plan, the jurisdiction questions become very difficult and fact specific. Removal occupies a significant space in a law school civil procedure class. I doubt that this forum is well suited for you to progress toward the particular answers you seek. If the parties are engaged in civil litigation already, that is a question for the lawyer of the party who is interested in removal.

There is no 30-day advance notice requirement for the initial period when deferrals first become allowed. Otherwise, if you had a safe harbor plan with immediate entry, you’d somehow have to give new hires a 30-day notice before they start working for you. If the plan already has deferrals now, then you can add a 3% safe harbor nonelective for this plan year that you’re in, but you can only add SH match as of the first day of the next plan year. 1.401(k)-something…