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Yes, as long as you meet the requirements to make contributions to the HSA (e.g., you are only covered by a high deductible health plan).

Yes, you can contribute different amounts based on the coverage they have. As long as you treat all those who have family coverage the same, then you're o.k. Likewise, as long as you treat those with single coverage you're o.k. And, the fact that one group has a higher or lower contribution does not create a discrimination problem.

I don't know of any reason why that can't be done.

Varying it based on position is probably discriminatory. And, varying it based on service is definitely discriminatory. The following is from 1.105-11 which applies to the health FSA because it is a self-funded heath plan: A plan may establish a maximum limit for the amount of reimbursement which may be paid a participant for any single benefit, or combination of benefits. However, any maximum limit attributable to employer contributions must be uniform for all participants and for all dependents of employees who are participants and may not be modified by reason of a participant's age or years of service.

I had trouble following Tom's analysis (maybe it's just too late). I agree that Roth deferrals are treated just like any other deferral (it's just the tax treatment that differs). And, no word from the IRS on whether they will issue a model or good-faith amendment.

Actually, it depends on what the proposed regulation provides. Generally, the preamble will indicate if the regs can be relied upon. The Roth regulations do not contain the reliance statement. Therefore, the regs cannot be relied upon and the standard is whatever reasonable interpretation you want. However, I don't think there was anything unusual in those regs that would be challenged should you follow them.

When you make the corrective amendment, you are in essence waiving the accrual requirement. But, regardless of how you view it, the individual is receiving an employer contribution and must get the gateway if you want to use cross-testing to pass (a)(4).

My vote is that it's a catch-up. One way to look at it - The limit on deferrals is 30% minus the after-tax contributions. On that basis, the limit was exceeded.

No, they are not the same. On plan termination you can't rely on the opinion letter. If you want reliance, you'd need to file for a determination letter using IRS Form 5310.

You may find the cite below helpful (it's a thread that touches on the subject). My connection is incredible slow right now, but I'm sure if you search this topic you'll find other relevant threats. The section of the reg. that you are referring to is one that puzzles everyone. The IRS is clear that a health FSA can't reimburse premiums. Whether this is a correct interpretation of the law is open to debate (at least to me). Nevertheless, it's not worth fighting. Especially because of the last sentence. My take on the last sentence is the acknowledgement of Rev. Rul. 61-146 which allows an employer to pay for individual health policies with no inclusion in an employee's gross income. Thus, this is a permissible benefit in a cafeteria plan (unless specifically prohibited under 125, 125 avoids constructive receipt over a choice of cash or a non-taxable benefit that the employer could have provided). So, you have the reg stating that you can't reimburse premiums from a health FSA and you have the issue of how to use 61-146 in a cafeteria plan (i.e., how can insurance can be reimbursed through the normal operation of a cafeteria plan). The answer is you set up a premium payment account. It's just like an FSA except that it's limited to premium payments such as COBRA, individual policies not offered by the employer such as dental, vision, etc.). Why would someone want to do this in a cafe plan? Because you don't have to worry about the 7 1/2% threshold to deduct the premiums and you save SS taxes and FUTA. What's the hitch? Lots of issues, such as: is the benefit now "employer" provided and therefore subject to ERISA, HIPPA (if 2 people have the same policy then no pre-existing may be imposed, etc.), and COBRA? I suspect you can find more on this by searching the board. http://benefitslink.com/boards/index.php?s...t=0entry34180

We're still waiting on guidance from the IRS.

It shuts down the GUST program for opinion (M&P plans) and advisory letters (volume submitter plans). It does not shut down the GUST determination letter program. As to whether you should submit or not, that's a loaded question. However, we don't have the EGTRRA determination letter procedure yet so there's no telling when you will be able to submit and get an EGTRRA determination letter. Presumably it will open on Feb. 1, 2006. But, if you submit out of the cycle that applies to the employer, then you may find that you have to resubmit when the cycle for the plan actually occurs (could be anytime within 5 years if an individually designed plan or probably 2008 or 2009 if using a prototype or volume submitter plan).

Universal availability doesn't apply to Roth K. While the proposed regs are silent on this, the statutory language doesn't impose this requirement.

I'd suggest using the language in IRS form 5305-C (link below) or B (for trusteed HSA). As pointed out, an HSA is very close to an IRA (with obvious differences in contribution limits and tax effects). But, it belongs to the individual just like an IRA. Thus, there is no SPD requirement - the IRS HSA forms are all that is needed. Maybe the IRS publications will also help (publication 969 - also cited below). http://www.irs.gov/pub/irs-pdf/f5305c.pdf http://www.irs.gov/pub/irs-pdf/p969.pdf

I don't think it would have any direct impact on terminees. Anyone who terminates is treated the same as when termination happened while there was a 12 month period of coverage. Most plans stop coverage on termination - then it's up to the individual to elect COBRA (if applicable). I guess where this could get tricky is whether termination might entitle someone to a refund (and how that might affect the COBRA amount). For example, I elect $1200. Do you take out $100/month or $1200/14 1/2 per month. If you take out $100/month and I quit mid-year, have you been accelerating payments so that I'm entitled to a refund (if coverage ceases on termination of employment). In other words, you're taking out $100/month and the actual cost is less than that because it should now be spread over 14 1/2 months, not 12 months. I can't imagine the IRS would take this position...but I don't know....