[Federal Register Volume 74, Number 172 (Tuesday, September 8, 2009)]
[Rules and Regulations]
[Pages 45994-46000]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-21225]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[TD 9457]
RIN 1545-BG71
Employer Comparable Contributions to Health Savings Accounts
Under Section 4980G, and Requirement of Return for Filing of the Excise
Tax Under Section 4980B, 4980D, 4980E or 4980G
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
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SUMMARY: This document contains final regulations providing guidance on
employer comparable contributions to Health Savings Accounts (HSAs)
under section 4980G of the Internal Revenue Code (Code) as amended by
sections 302, 305 and 306 of the Tax Relief and Health Care Act of 2006
(the Act). The final regulations also provide guidance relating to the
manner and method of reporting and paying the excise tax under sections
4980B, 4980D, 4980E, and 4980G of the Code. These final regulations
would affect employers that contribute to employees' HSAs and Archer
MSAs, employers or employee organizations that sponsor a group health
plan, and certain third parties such as insurance companies or HMOs or
third-party administrators who are responsible for providing benefits
under the plan.
DATES: Effective date. These regulations are effective on September 8,
2009.
Applicability date. The sections of these regulations that provide
guidance on employer comparable contributions to HSAs under section
4980G apply to employer contributions made on or after January 1, 2010.
The sections of these regulations that provide guidance relating to the
excise tax under sections 4980B, 4980D, 4980E and 4980G apply to any
Form 8928 that is due on or after January 1, 2010.
FOR FURTHER INFORMATION CONTACT: Concerning the final regulations as
they relate to sections 4980E or 4980G, Mireille Khoury at (202) 622-
6080; and concerning the final regulations as they relate to section
4980B or 4980D, Russ Weinheimer at (202) 622-6080 (not toll-free
numbers).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained in these regulations has
been reviewed and approved by the Office of
[[Page 45995]]
Management and Budget in accordance with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)), under control number 1545-2146. The
collection of information in these final regulations is in Sec.
54.6011-2. The collection of information results from the requirement
to file a return for the payment of the excise tax under section 4980B,
4980D, 4980E, or 4980G of the Code. The likely respondents are
employers that contribute to employees' HSAs and Archer MSAs, employers
or employee organizations that sponsor a group health plan, and certain
third parties such as insurance companies or HMOs or third-party
administrators who are responsible for providing benefits under the
plan.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a valid
control number assigned by the Office of Management and Budget. Books
or records relating to a collection of information must be retained as
long as their contents might become material in the administration of
any internal revenue law. Generally, tax returns and tax return
information are confidential, as required by 26 U.S.C. 6103.
Background
This document contains final amendments to the Excise Tax
Regulations (26 CFR part 54) under section 4980G of the Code, as
amended by Sections 302 and 305 of the Tax Relief and Health Care Act
of 2006 (the Act), Public Law 109-432, under paragraph (d) of section
4980G of the Code, as enacted by section 306 of the Act, and under
Section 4980E of the Code.
Under section 4980G, an excise tax is imposed on an employer that
fails to make comparable contributions to the HSAs of its employees. On
July 31, 2006, final regulations on comparability were published in the
Federal Register, 72 FR 30501 (2007-26 IRB 1495), TD 9277. In addition,
on April 17, 2008, final regulations were published in the Federal
Register, 73 FR 20794 (2008-20 IRB 975), TD 9393, providing guidance on
employer comparable contributions to HSAs in instances where an
employee has not established an HSA by December 31st and in instances
where an employer accelerates contributions for the calendar year for
employees who have incurred qualified medical expenses. See Sec.
601.601(d)(2).
This document also contains final amendments to the Excise Tax
Regulations (26 CFR part 54) under sections 4980B and 4980D. Under
section 4980B, group health plans maintained by an employer with 20 or
more employees must comply with continuation coverage requirements. If
a plan does not satisfy these requirements, an excise tax is imposed of
$100 per day per affected beneficiary. Final regulations under section
4980B have been published, including provisions concerning the excise
tax, but no return filing requirement has previously been imposed. See
Sec. 54.4980B-2, Q&A-9 and Q&A-10. Moreover, under chapter 100 of the
Code, group health plans must comply with various requirements,
including limitations on preexisting condition exclusions,
certification of creditable coverage, special enrollments, prohibitions
against discrimination based on a health factor (including genetic
information), parity between mental health benefits and medical/
surgical benefits, minimum hospital lengths of stay in connection with
childbirth, and continued coverage for post-secondary students with a
serious medical condition. If a plan does not satisfy any of these
requirements under chapter 100, section 4980D imposes an excise tax of
$100 per day per affected individual. Regulations interpreting the
substantive requirements of chapter 100 have previously been published,
but no regulations have been published concerning the excise tax under
section 4980D.
On July 16, 2008, proposed regulations (REG-120476-07) were
published in the Federal Register (73 FR 40793) addressing comparable
contributions to nonhighly compensated employees. The proposed
regulations also provided guidance for employers that offer qualified
HSA distributions and for employers that make the maximum annual HSA
contribution on behalf of all employees who are eligible individuals on
the first day of the last month of the employees' taxable year.
Finally, the proposed regulations provided guidance on the requirement
of a return to accompany payment of the excise taxes under sections
4980B, 4980D, 4980E, and 4980G and the time for filing that return.
These final regulations adopt the provisions of the proposed
regulations without substantive revision. The final regulations make
certain minor clarifying changes to the rules of the proposed
regulations.
Explanation of Provisions and Summary of Comments
Special Rule for Contributions to Nonhighly Compensated Employees
Paragraph (d) of section 4980G provides an exception to the
comparability rules that allows, but does not require, employers to
make larger contributions to the HSAs of nonhighly compensated
employees than the employer makes to the HSAs of highly compensated
employees. The final regulations address this exception to
comparability in Sec. 54.4980G-4 and provide that employer
contributions to the HSAs of nonhighly compensated employees may be
larger than employer contributions to the HSAs of highly compensated
employees with comparable coverage during a period. Conversely,
employer contributions to the HSAs of highly compensated employees may
not exceed employer contributions to the HSAs of nonhighly compensated
employees with comparable coverage during a period.
The comparability rules still apply with respect to contributions
to the HSAs of all nonhighly compensated employees who are comparable
participating employees (eligible individuals who are in the same
category of employees with the same category of high deductible health
plan (HDHP) coverage) and an employer must make comparable
contributions to the HSA of each nonhighly compensated employee who is
a comparable participating employee during the calendar year.
Similarly, the comparability rules still apply with respect to
contributions to the HSAs of all highly compensated employees who are
comparable participating employees and an employer must make comparable
contributions to the HSA of each highly compensated employee who is a
comparable participating employee during the calendar year.
Collectively bargained employees are disregarded for purposes of
section 4980G, as are HSA contributions made through a cafeteria plan.
For purposes of section 4980G(d), highly compensated employee is
defined under section 414(q) and includes any employee who was (1) a
five-percent owner at any time during the year or the preceding year;
or (2) for the preceding year, (A) had compensation from the employer
in excess of $110,000 (for 2009, indexed for inflation) and (B) if
elected by the employer, was in the group consisting of the top 20
percent of employees when ranked based on compensation. Nonhighly
compensated employees are employees that are not highly compensated
employees.
Maximum HSA Contribution Permitted for Employees Who Become Eligible
Individuals Mid-Year
Section 305 of the Act provides that individuals who are eligible
individuals
[[Page 45996]]
on the first day of the last month of the employees' taxable year
(December 1 for calendar year taxpayers) may make or have made on their
behalf the maximum annual HSA contribution based on their HDHP coverage
(self only or family) on that date. A portion of the contribution is
included in income and subject to an additional 10 percent tax if the
individual fails to remain an eligible individual for 12 months after
the last month of the taxable year. See section 223(b)(8). Section
54.4980G-6 of the final regulations provides that the employer can
contribute up to this maximum contribution on behalf of all employees
who are eligible individuals on the first day of the last month of the
employees' taxable year (December 1 for calendar year taxpayers),
including employees who became eligible individuals after January 1st
of the calendar year and eligible individuals who were hired after
January 1st of the calendar year (both such classes of individuals are
hereinafter referred to as ``mid-year eligible individuals''). An
employer who makes the maximum calendar year HSA contribution, or who
contributes more than a pro-rata amount, on behalf of employees who are
mid-year eligible individuals will not fail to satisfy comparability
merely because some employees will have received more contributions on
a monthly basis than employees who worked the entire calendar year.
Employers are not required to make these greater than pro-rata
contributions and may instead pro-rate contributions based on the
number of months that an individual was both employed by the employer
and an eligible individual. However, if an employer contributes more
than the monthly pro-rata amount for the calendar year to the HSA of
any employee who is a mid-year eligible individual, the employer must
then contribute, on an equal and uniform basis, a greater than pro-rata
amount to the HSAs of all comparable participating employees who are
mid-year eligible individuals. Likewise, if the employer contributes
the maximum annual contribution amount for the calendar year to the HSA
of any employee who is a mid-year eligible individual, the employer
must contribute that same amount to the HSAs of all comparable
participating employees who are mid-year eligible individuals.
Special Comparability Rules for Qualified HSA Distributions
Section 302(a) of the Act provides for qualified HSA distributions.
See section 106(e) and Notice 2007-22 (2007-10 IRB 670). See Sec.
601.601(d)(2). A qualified HSA distribution is a direct distribution of
an amount from a health flexible spending arrangement (health FSA) or a
health reimbursement arrangement (HRA) to an HSA. The distribution must
not exceed the lesser of the balance in the health FSA or HRA on
September 21, 2006, or as of the date of the distribution. Section
54.4980G-7 of the final regulations provides that if an employer offers
qualified HSA distributions to any employee who is an eligible
individual covered under any HDHP, the employer must offer qualified
HSA distributions to all employees who are eligible individuals covered
under any HDHP. However, an employer that offers qualified HSA
distributions only to employees who are eligible individuals covered
under the employer's HDHP is not required to offer qualified HSA
distributions to employees who are eligible individuals but are not
covered under the employer's HDHP.
Reporting and Payment of the Excise Tax Under Section 4980B, 4980D,
4980E or 4980G
The regulations prescribe the manner and method of paying the
excise taxes imposed under section 4980B, 4980D, 4980E, or 4980G. The
final regulations, like the proposed regulations, provide that these
excise taxes must be reported on Form 8928, ``Return of Certain Excise
Taxes Under Chapter 43 of the Internal Revenue Code.'' The excise tax
under section 4980B, 4980D, 4980E or 4980G must be paid at the time
prescribed for filing of the excise tax return (without extensions).
With respect to the excise tax under section 4980B or 4980D for
employers and third parties such as insurers or third party
administrators, the return is due on or before the due date for filing
the person's Federal income tax return. An extension to file the
person's income tax return does not extend the date for filing Form
8928. With respect to the excise tax under section 4980B or 4980D for
multiemployer or specified multiple employer health plans, the return
is due on or before the last day of the seventh month after the end of
the plan year. Finally, with respect to the excise tax under section
4980E or 4980G for noncomparable contributions, the return is due on or
before the 15th day of the fourth month following the calendar year in
which the noncomparable contributions were made. The final regulations
also provide guidance regarding the place for filing these excise tax
returns, the signing of these excise returns, and the time and place
for paying the tax shown on such returns.
Two comments were received regarding the reporting and filing of
the excise taxes under sections 4980B, 4980D, 4980E, and 4980G. One
commentator was concerned that the noncompliance period under section
4980B or 4980D could extend beyond the due date for filing the excise
tax return and suggested that the due date be extended to 90 days after
the end of the noncompliance period. It is true that the noncompliance
period under section 4980B, for example, could extend over four or more
taxable years of the person responsible for payment of the tax.
Therefore, extending the due date until 90 days after the end of the
noncompliance period would in some cases defer the obligation to pay
the excise tax for over four years, which would not be in the interest
of sound tax administration. As such, the final regulations do not
adopt this change.
Another commentator noted that the excise tax might be due before
the person responsible for paying it had even discovered that a failure
under section 4980B or 4980D had occurred. However, this concern is
mitigated by the fact that sections 4980B and 4980D provide that the
excise tax does not apply for any period for which the responsible
party did not know, or exercising reasonable diligence would not have
known, that the failure existed. Also, under sections 4980B and 4980D,
the excise tax does not apply if the failure is corrected (that is, the
failure is retroactively undone to the extent possible and the affected
beneficiary is placed in a financial position as good as the
beneficiary would have been had the failure not occurred).
Finally, a commentator also stated that there are some
uncertainties about the application of the excise tax rules to various
situations that could arise under section 4980B. The commentator
suggested that the filing and payment requirement for the excise tax
under section 4980B should not apply until additional guidance was
issued that addressed these uncertainties. The Treasury Department and
the IRS believe that the statutory and regulatory provisions in this
area provide appropriate guidance. Therefore, the final regulations do
not adopt this comment.
The guidance in the proposed regulations relating to the excise
taxes imposed under section 4980B, 4980D, 4980E, or 4980G was contained
in Q & A-11 in Sec. 4980B-2, Q & A-1 in Sec. 4980D-1, Q & A-1 in
Sec. 4980E-1, and Q & A-5 in Sec. 4980G-1. The final regulations
provide additional clarifying information relating to the guidance
previously provided in these Q &As,
[[Page 45997]]
and the final regulations also consolidate this guidance by including
it under the following sections: Sec. Sec. 54.6011-2, 54.6061-1,
54.6071-1, 54.6091-1 and 54.6151-1.
Effective/Applicability Date
The sections of these regulations that provide guidance on employer
comparable contributions to HSAs under section 4980G apply to employer
contributions made on or after January 1, 2010.
The sections of these regulations that provide guidance relating to
the excise tax under sections 4980B, 4980D, 4980E and 4980G apply to
any Form 8928 that is due on or after January 1, 2010.
Special Analyses
It has been determined that this Treasury Decision is not a
significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory assessment is not required. It also has been
determined that section 553(b) of the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to these regulations. It is hereby
certified that the collection of information in these regulations will
not have a significant economic impact on a substantial number of small
entities. Therefore, a Regulatory Flexibility Analysis under the
Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required.
Pursuant to section 7805(f) of the Code, the notice of proposed
rulemaking preceding this regulation was submitted to the Chief Counsel
for Advocacy of the Small Business Administration for comment on its
impact on small business.
Drafting Information
The principal authors of these final regulations are Mireille
Khoury and Russ Weinheimer, Office of Division Counsel/Associate Chief
Counsel (Tax Exempt and Government Entities), Internal Revenue Service.
However, personnel from other offices of the IRS and Treasury
Department participated in their development.
List of Subjects in 26 CFR Part 54
Excise taxes, Pensions, Reporting and recordkeeping requirements.
Adoption of Amendment to the Regulations
0
Accordingly, 26 CFR part 54 is amended as follows:
PART 54--PENSION EXCISE TAXES
0
Paragraph 1. The authority citation for part 54 is amended by adding
entries in numerical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 54.4980G-6 also issued under 26 U.S.C. 4980G.
Section 54.4980G-7 also issued under 26 U.S.C. 4980G. * * *
0
Par. 2. Section 54.4980B-0 is amended by adding a new Q-11 to Sec.
54.4980B-2 in the list of questions to read as follows:
Sec. 54.4980B-0 Table of contents.
* * * * *
List of Questions
* * * * *
Sec. 54.4980B-2 Plans that must comply.
* * * * *
Q-11: If a person is liable for the excise tax under section 4980B,
what form must the person file and what is the due date for the filing
and payment of the excise tax?
* * * * *
0
Par. 3. Section 54.4980B-2 is amended by adding a new Q&A-11 to read as
follows:
Sec. 54.4980B-2 Plans that must comply.
* * * * *
Q-11: If a person is liable for the excise tax under section 4980B,
what form must the person file and what is the due date for the filing
and payment of the excise tax?
A-11: (a) In general. See Sec. Sec. 54.6011-2 and 54.6151-1.
(b) Due date for filing of return by employers or other persons
responsible for benefits under a group health plan. See Sec. 54.6071-
1(a)(1).
(c) Due date for filing of return by multiemployer plans. See Sec.
54.6071-1(a)(2).
(d) Effective/applicability date. In the case of an employer or
other person mentioned in paragraph (b) of this Q & A-11, the rules in
this Q & A-11 are effective for taxable years beginning on or after
January 1, 2010. In the case of a plan mentioned in paragraph (c) of
this Q & A-11, the rules in this Q & A-11 are effective for plan years
beginning on or after January 1, 2010.
0
Par. 4. Section 54.4980D-1 is added to read as follows:
Sec. 54.4980D-1 Requirement of return and time for filing of the
excise tax under section 4980D.
Q-1: If a person is liable for the excise tax under section 4980D,
what form must the person file and what is the due date for the filing
and payment of the excise tax?
A-1: (a) In general. See Sec. Sec. 54.6011-2 and 54.6151-1.
(b) Due date for filing of return by employers. See Sec. 54.6071-
1(b)(1).
(c) Due date for filing of return by multiemployer plans or
multiple employer health plans. See Sec. 54.6071-1(b)(2).
(d) Effective/applicability date. In the case of an employer or
other person mentioned in paragraph (b) of this Q & A-1, the rules in
this Q & A-1 are effective for taxable years beginning on or after
January 1, 2010. In the case of a plan mentioned in paragraph (c) of
this Q & A-1, the rules in this Q & A-1 are effective for plan years
beginning on or after January 1, 2010.
0
Par. 5. Section 54.4980E-1 is added to read as follows:
Sec. 54.4980E-1 Requirement of return and time for filing of the
excise tax under section 4980E.
Q-1: If a person is liable for the excise tax under section 4980E,
what form must the person file and what is the due date for the filing
and payment of the excise tax?
A-1: (a) In general. See Sec. Sec. 54.6011-2, 54.6151-1 and
54.6071-1(c).
(b) Effective/applicability date. The rules in this Q & A-1 are
effective for plan years beginning on or after January 1, 2010.
0
Par. 6. Section 54.4980G-1 is amended by:
0
1. Revising the last sentence in A-1 and adding a new sentence at the
end of paragraph (a) in A-2.
0
2. Adding a new Q & A-5.
The revisions and addition read as follows:
Sec. 54.4980G-1 Failure of employer to make comparable health savings
account contributions.
* * * * *
A-1: * * * But see Q & A-6 in Sec. 54.4980G-3 for treatment of
collectively bargained employees and Q & A-1 in Sec. 54.4980G-6 for
the rules allowing larger comparable contributions to nonhighly
compensated employees.
* * * * *
A-2: (a) * * * See also Sec. 54.4980G-6 for the rules allowing
larger comparable contributions to nonhighly compensated employees.
* * * * *
Q-5: If a person is liable for the excise tax under section 4980G,
what form must the person file and what is the due date for the filing
and payment of the excise tax?
A-5: (a) In general. Sec. Sec. 54.6011-2, 54.6151-1 and 54.6071-
1(d).
(b) Effective/applicability date. The rules in this Q & A-5 are
effective for employer contributions made for calendar years beginning
on or after January 1, 2010.
[[Page 45998]]
0
Par. 7. Section 54.4980G-3 is amended by:
0
1. Revising the section heading.
0
2. Revising the introductory text in paragraph (a) of A-5.
0
3. Adding a new sentence at the end of paragraph (c) of A-5 and
paragraph (a) of A-9.
The revision and additions read as follows:
Sec. 54.4980G-3 Failure of employer to make comparable health savings
account contributions.
* * * * *
A-5: (a) Categories. The categories of employees for comparability
testing are as follows (but see Q & A-6 of this section for the
treatment of collectively bargained employees and Q & A-1 of Sec.
54.4980G-6 for a special rule for contributions made to the HSAs of
nonhighly compensated employees)--
* * * * *
(c) * * * But see Sec. 54.4980G-6 for a special rule for
contributions made to the HSAs of nonhighly compensated employees.
* * * * *
A-9: (a) * * * See Sec. 54.4980G-6 for a special rule for
contributions made to the HSAs of nonhighly compensated employees.
* * * * *
0
Par. 8. Section 54.4980G-4 is amended by:
0
1. Adding a new sentence at the end of paragraph (a) of A-1.
0
2. Adding paragraphs (h), (i) and (j) to A-2.
The additions read as follows:
Sec. 54.4980G-4 Calculating comparable contributions.
* * * * *
A-1: (a) * * * But see Q & A-1 of Sec. 54.4980G-6 for a special
rule for contributions made to the HSAs of nonhighly compensated
employees.
* * * * *
A-2: * * *
* * * * *
(h) Maximum contribution permitted for all employees who are
eligible individuals during the last month of the taxable year. An
employer may contribute up to the maximum annual contribution amount
for the calendar year (based on the employees' HDHP coverage) to the
HSAs of all employees who are eligible individuals on the first day of
the last month of the employees' taxable year, including employees who
worked for the employer for less than the entire calendar year and
employees who became eligible individuals after January 1st of the
calendar year. For example, such contribution may be made on behalf of
an eligible individual who is hired after January 1st or an employee
who becomes an eligible individual after January 1st. Employers are not
required to provide more than a pro-rata contribution based on the
number of months that an individual was an eligible individual and
employed by the employer during the year. However, if an employer
contributes more than a pro-rata amount for the calendar year to the
HSA of any eligible individual who is hired after January 1st of the
calendar year or any employee who becomes an eligible individual any
time after January 1st of the calendar year, the employer must
contribute that same amount on an equal and uniform basis to the HSAs
of all comparable participating employees (as defined in Q & A-1 in
Sec. 54.4980G-1) who are hired or become eligible individuals after
January 1st of the calendar year. Likewise, if an employer contributes
the maximum annual contribution amount for the calendar year to the HSA
of any eligible individual who is hired after January 1st of the
calendar year or any employee who becomes an eligible individual any
time after January 1st of the calendar year, the employer must
contribute the maximum annual contribution amount on an equal and
uniform basis to the HSAs of all comparable participating employees (as
defined in Q & A-1 in Sec. 54.4980G-1) who are hired or become
eligible individuals after January 1st of the calendar year. An
employer who makes the maximum calendar year contribution or more than
a pro-rata contribution to the HSAs of employees who become eligible
individuals after the first day of the calendar year or eligible
individuals who are hired after the first day of the calendar year will
not fail to satisfy comparability merely because some employees will
have received more contributions on a monthly basis than employees who
worked the entire calendar year.
(i) Examples. The following examples illustrate the rules in
paragraph (h) in this Q & A-2. In the following examples, no
contributions are made through a section 125 cafeteria plan and none of
the employees are covered by a collective bargaining agreement.
Example 1. On January 1, 2010, Employer Q contributes $1,000 for
the calendar year to the HSAs of employees who are eligible
individuals with family HDHP coverage. In mid-March of the same
year, Employer Q hires Employee A, an eligible individual with
family HDHP coverage. On April 1, 2010, Employer Q contributes
$1,000 to the HSA of Employee A. In September of the same year,
Employee B becomes an eligible individual with family HDHP coverage.
On October 1, 2010, Employer G contributes $1,000 to the HSA of
Employee B. Employer Q does not make any other contributions for the
2010 calendar year. Employer Q's contributions satisfy the
comparability rules.
Example 2. For the 2010 calendar year, Employer R only has two
employees, Employee C and Employee D. Employee C, an eligible
individual with family HDHP coverage, works for Employer R for the
entire calendar year. Employee D, an eligible individual with family
HDHP coverage works for Employer R from July 1st through December
31st. Employer R contributes $1,200 for the calendar year to the HSA
of Employee C and $600 to the HSA of Employee D. Employer R does not
make any other contributions for the 2010 calendar year. Employer
R's contributions satisfy the comparability rules.
(j) Effective/applicability date. The rules in paragraphs (h) and
(i) of Q & A-2 are effective for employer contributions made for
calendar years beginning on or after January 1, 2010.
* * * * *
0
Par. 9. Section 54.4980G-6 is added to read as follows:
Sec. 54.4980G-6 Special rule for contributions made to the HSAs of
nonhighly compensated employees.
Q-1: May an employer make larger contributions to the HSAs of
nonhighly compensated employees than to the HSAs of highly compensated
employees?
A-1: Yes. Employers may make larger HSA contributions for nonhighly
compensated employees who are comparable participating employees than
for highly compensated employees who are comparable participating
employees. See Q & A-1 in Sec. 54.4980G-1 for the definition of
comparable participating employee. For purposes of this section, highly
compensated employee is defined under section 414(q). Nonhighly
compensated employees are employees that are not highly compensated
employees. The comparability rules continue to apply with respect to
contributions to the HSAs of all nonhighly compensated employees.
Employers must make comparable contributions for the calendar year to
the HSA of each nonhighly compensated employee who is a comparable
participating employee.
Q-2: May an employer make larger contributions to the HSAs of
highly compensated employees than to the HSAs of nonhighly compensated
employees?
A-2: (a) In general. No. Employer contributions to HSAs for highly
compensated employees who are comparable participating employees may
not be larger than employer HSA contributions for nonhighly
[[Page 45999]]
compensated employees who are comparable participating employees. The
comparability rules continue to apply with respect to contributions to
the HSAs of all highly compensated employees. Employers must make
comparable contributions for the calendar year to the HSA of each
highly compensated comparable participating employee. See Q & A-1 in
Sec. 54.4980G-1 for the definition of comparable participating
employee.
(b) Examples. The following examples illustrate the rules in Q & A-
1 and Q & A-2 of this section. No contributions are made through a
section 125 cafeteria plan and none of the employees in the following
examples are covered by a collective bargaining agreement. All of the
employees in the following examples have the same HDHP deductible for
the same category of coverage.
Example 1. In 2010, Employer A contributes $1,000 for the
calendar year to the HSA of each full-time nonhighly compensated
employee who is an eligible individual with self-only HDHP coverage.
Employer A makes no contribution to the HSA of any full-time highly
compensated employee who is an eligible individual with self-only
HDHP coverage. Employer A's HSA contributions for calendar year 2010
satisfy the comparability rules.
Example 2. In 2010, Employer B contributes $2,000 for the
calendar year to the HSA of each full-time nonhighly compensated
employee who is an eligible individual with self-only HDHP coverage.
Employer B also contributes $1,000 for the calendar year to the HSA
of each full-time highly compensated employee who is an eligible
individual with self-only HDHP coverage. Employer B's HSA
contributions for calendar year 2010 satisfy the comparability
rules.
Example 3. In 2010, Employer C contributes $1,000 for the
calendar year to the HSA of each full-time nonhighly compensated
employee who is an eligible individual with self-only HDHP coverage.
Employer C contributes $2,000 for the calendar year to the HSA of
each full-time highly compensated employee who is an eligible
individual with self-only HDHP coverage. Employer C's HSA
contributions for calendar year 2010 do not satisfy the
comparability rules.
Example 4. In 2010, Employer D contributes $1,000 for the
calendar year to the HSA of each full-time nonhighly compensated
employee who is an eligible individual with self-only HDHP coverage.
Employer D also contributes $1,000 to the HSA of each full-time
highly compensated employee who is an eligible individual with self-
only HDHP coverage. In addition, the employer contributes an
additional $500 to the HSA of each nonhighly compensated employee
who participates in a wellness program. The nonhighly compensated
employees did not receive comparable contributions, and, therefore,
Employer D's HSA contributions for calendar year 2010 do not satisfy
the comparability rules.
Example 5. In 2010, Employer E contributes $1,000 for the
calendar year to the HSA of each full-time non-management nonhighly
compensated employee who is an eligible individual with family HDHP
coverage. Employer E also contributes $500 for the calendar year to
the HSA of each full-time management nonhighly compensated employee
who is an eligible individual with family HDHP coverage. The
nonhighly compensated employees did not receive comparable
contributions, and, therefore, Employer E's HSA contributions for
calendar year 2010 do not satisfy the comparability rules.
Q-3: May an employer make larger HSA contributions for employees
with self plus two HDHP coverage than employees with self plus one HDHP
coverage even if the employees with self plus two are all highly
compensated employees and the employees with self plus one are all
nonhighly compensated employees?
A-3: (a) Yes. Q & A-1 in Sec. 54.4980G-4 provides that an
employer's contribution with respect to the self plus two category of
HDHP coverage may not be less than the contribution with respect to the
self plus one category and the contribution with respect to the self
plus three or more category may not be less than the contribution with
respect to the self plus two category. Therefore, the comparability
rules are not violated if an employer makes a larger HSA contribution
for the self plus two category of HDHP coverage than to self plus one
coverage, even if the employees with self plus two coverage are all
highly compensated employees and the employees with self plus one
coverage are all nonhighly compensated employees. Likewise, the
comparability rules are not violated if an employer makes a larger HSA
contribution for the self plus three category of HDHP coverage than to
self plus two coverage, even if the employees with self plus three
coverage are all highly compensated employees and the employees with
self plus two coverage are all nonhighly compensated employees.
(b) Example. The following example illustrates the rules in
paragraph (a) of this Q & A-3. In the following example, no
contributions are made through a section 125 cafeteria plan and none of
the employees are covered by a collective bargaining agreement.
Example. In 2010, Employer F contributes $1,000 for the calendar
year to the HSA of each full-time employee who is an eligible
individual with self plus one HDHP coverage. Employer F contributes
$1,500 for the calendar year to the HSA of each employee who is an
eligible individual with self plus two HDHP coverage. The deductible
for both the self plus one HDHP and the self plus two HDHP is
$2,000. Employee A, an eligible individual, is a nonhighly
compensated employee with self plus one coverage. Employee B, an
eligible individual, is a highly compensated employee with self plus
two coverage. For the 2010 calendar year, Employer F contributes
$1,000 to Employee A's HSA and $1,500 to Employee B's HSA. Employer
F's HSA contributions satisfy the comparability rules.
Q-4: What is the effective date for the rules in this section?
A-4: The rules in this section are effective for employer
contributions made for calendar years beginning on or after January 1,
2010.
0
Par. 10. Section 54.4980G-7 is added to read as follows:
Sec. 54.4980G-7 Special comparability rules for qualified HSA
distributions contributed to HSAs on or after December 20, 2006 and
before January 1, 2012.
Q-1: How do the comparability rules of section 4980G apply to
qualified HSA distributions under section 106(e)(2)?
A-1: The comparability rules of section 4980G do not apply to
amounts contributed to employee HSAs through qualified HSA
distributions. However, in order to satisfy the comparability rules, if
an employer offers qualified HSA distributions, as defined in section
106(e)(2), to any employee who is an eligible individual covered under
any HDHP, the employer must offer qualified HSA distributions to all
employees who are eligible individuals covered under any HDHP. However,
if an employer offers qualified HSA distributions only to employees who
are eligible individuals covered under the employer's HDHP, the
employer is not required to offer qualified HSA distributions to
employees who are eligible individuals but are not covered under the
employer's HDHP.
Q-2: What is the effective date for the rules in this section?
A-2: The rules in this section are effective for are effective for
employer contributions made for calendar years beginning on or after
January 1, 2010.
0
Par. 11. Section 54.6011-2 is added to read as follows:
Sec. 54.6011-2 General requirement of return, statement, or list.
Effective for any Form 8928 that is due on or after January 1,
2010, any person liable for tax under section 4980B, 4980D, 4980E, or
4980G of the Code shall file a return with respect to the tax on Form
8928. The return must include the information required by Form 8928 and
the instructions issued with respect to it.
[[Page 46000]]
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Par. 12. Section 54.6061-1 is added to read as follows:
Sec. 54.6061-1 Signing of returns and other documents.
Effective for any Form 8928 that is due on or after January 1,
2010, any return, statement, or other document required to be made with
respect to a tax imposed by section 4980B, 4980D, 4980E, or 4980G of
the Code or the regulations under section 4980B, 4980D, 4980E, or 4980G
must be signed by the person required to file the return, statement, or
other document, or by the persons required or duly authorized to sign
in accordance with the regulations, forms, or instructions prescribed
with respect to such return, statement, or document. An individual's
signature on such return, statement, or other document shall be prima
facie evidence that the individual is authorized to sign the return,
statement, or other document.
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Par. 13. Section 54.6071-1 is added to read as follows:
Sec. 54.6071-1 Time for filing returns.
(a) Returns under section 4980B. (1) Due date for filing of return
by employers or other persons responsible for benefits under a group
health plan. If the person liable for the excise tax is an employer or
other person responsible for providing or administering benefits under
a group health plan (such as an insurer or a third party
administrator), the return required by Sec. 54.6011-2 must be filed on
or before the due date for filing the person's income tax return and
must reflect the portion of the noncompliance period for each failure
under section 4980B that falls during the person's taxable year. An
extension to file the person's income tax return does not extend the
date for filing Form 8928.
(2) Due date for filing of return by multiemployer plans. If the
person liable for the excise tax is a multiemployer plan, the return
required by Sec. 54.6011-2 must be filed on or before the last day of
the seventh month following the end of the plan's plan year. The filing
of Form 8928 by a plan must reflect the portion of the noncompliance
period for each failure under section 4980B that falls during the
plan's plan year.
(b) Returns under section 4980D. (1) Due date for filing of return
by employers. If the person liable for the excise tax is an employer,
the return required by Sec. 54.6011-2 must be filed on or before the
due date for filing the employer's income tax return and must reflect
the portion of the noncompliance period for each failure under chapter
100 that falls during the employer's taxable year. An extension to file
the employer's income tax return does not extend the date for filing
Form 8928.
(2) Due date for filing of return by multiemployer plans or
multiple employer health plans. If the person liable for the excise tax
is a multiemployer plan or a specified multiple employer health plan,
the return required by Sec. 54.6011-2 must be filed on or before the
last day of the seventh month following the end of the plan's plan
year. The filing of Form 8928 by a plan must reflect the portion of the
noncompliance period for each failure under chapter 100 that falls
during the plan's plan year.
(c) Returns under section 4980E. Any employer who is liable for the
excise tax under section 4980E must report this tax by filing the
return required by Sec. 54.6011-2 on or before the 15th day of the
fourth month following the calendar year in which the noncomparable
contributions were made.
(d) Returns under section 4980G. Any employer who is liable for the
excise tax under section 4980E must report this tax by filing the
return required by Sec. 54.6011-2 on or before the 15th day of the
fourth month following the calendar year in which the noncomparable
contributions were made. See Q & A-4 of Sec. 54.4980G-1 for the rules
on computation of the excise tax under section 4980G.
(e) Effective/applicability date: The rules in this section are
effective for any Form 8928 that is due on or after January 1, 2010.
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Par. 14. Section 54.6091-1 is added to read as follows:
Sec. 54.6091-1 Place for filing excise tax returns under section
4980B, 4980D, 4980E, or 4980G.
Effective for any Form 8928 that is due on or after January 1,
2010, the return required by Sec. 54.6011-2 must be filed at the place
specified in the forms and instructions provided by the Internal
Revenue Service.
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Par. 15. Section 54.6151-1 is added to read as follows:
Sec. 54.6151-1 Time and place for paying of tax shown on returns.
Effective for any Form 8928 that is due on or after January 1,
2010, the tax shown on any return which is imposed under section 4980B,
4980D, 4980E or 4980G shall, without assessment or notice and demand,
be paid to the internal revenue officer with whom the return is filed
at the time and place for filing such return (determined without regard
to any extension of time for filing the return). For provisions
relating to the time and place for filing such return, see Sec. Sec.
54.6071-1 and 54.6091-1.
Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
Approved: August 20, 2009.
Michael Mundaca,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. E9-21225 Filed 9-4-09; 8:45 am]
BILLING CODE 4830-01-P