45994            Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Rules and Regulations

               ...
Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Rules and Regulations                                  ...
45996            Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Rules and Regulations

               ...
Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Rules and Regulations                                  ...
45998            Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Rules and Regulations

               ...
Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Rules and Regulations                                  ...
Week Of 2009 09 14 E9 21225
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Week Of 2009 09 14 E9 21225

  1. 1. 45994 Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Rules and Regulations governmental plans which are rendered plan described in § 1.457–2(f), is treated DEPARTMENT OF THE TREASURY superfluous with this change. as having complied with section 401(a)(9) for all years to which section Internal Revenue Service Effective/Applicability Date 401(a)(9) applies to the plan if the plan These regulations are effective on complies with a reasonable and good 26 CFR Part 54 September 8, 2009 and apply to all plan faith interpretation of section 401(a)(9). [TD 9457] years to which section 401(a)(9) applies. § 1.401(a)(9)–6 [Amended] RIN 1545–BG71 Special Analyses It has been determined that these final ■ Par. 3. Section 1.401(a)(9)–6 is Employer Comparable Contributions to regulations are not a significant amended by: Health Savings Accounts Under regulatory action as defined in ■ 1. Removing Q&A–16. Section 4980G, and Requirement of Executive Order 12866. Therefore, a Return for Filing of the Excise Tax ■ 2. Redesignating Q&A–17 as Q&A–16. Under Section 4980B, 4980D, 4980E or regulatory assessment is not required. It also has been determined that section ■ 3. Removing the word ‘‘A–16’’ and 4980G 553(b) of the Administrative Procedure adding ‘‘A–15’’ in the newly-designated AGENCY: Internal Revenue Service (IRS), Act (5 U.S.C. chapter 5) does not apply A–16. Treasury. to these regulations, and, because ■ 4. Removing the last sentence of the ACTION: Final regulations. §§ 1.401(a)(9)–1 and 1.403(b)–6 do not newly-designated A–16. impose a collection of information on SUMMARY: This document contains final small entities, the Regulatory Flexibility ■ Par. 4. Section 1.403(b)–6 is amended regulations providing guidance on Act (5 U.S.C. chapter 6) does not apply. by: employer comparable contributions to Pursuant to section 7805(f) of the Code, ■ 1. Revising the last sentence of Health Savings Accounts (HSAs) under the notice of proposed rulemaking paragraph (e)(2). section 4980G of the Internal Revenue preceding these regulations was Code (Code) as amended by sections ■ 2. Adding a new paragraph (e)(8). submitted to the Chief Counsel for 302, 305 and 306 of the Tax Relief and Advocacy of the Small Business The revisions and addition are as Health Care Act of 2006 (the Act). The Administration for comment on its follows: final regulations also provide guidance impact on small business. relating to the manner and method of § 1.403(b)–6 Timing of distributions and Drafting Information benefits. reporting and paying the excise tax under sections 4980B, 4980D, 4980E, The principal authors of these * * * * * and 4980G of the Code. These final regulations are Michael P. Brewer and (e) Minimum required distributions regulations would affect employers that Cathy V. Pastor, Office of Division for eligible plans. contribute to employees’ HSAs and Counsel/Associate Chief Counsel (Tax Archer MSAs, employers or employee Exempt and Government Entities). * * * * * organizations that sponsor a group However, other personnel from the IRS (2) * * * Consequently, except as health plan, and certain third parties and the Treasury Department otherwise provided in this paragraph such as insurance companies or HMOs participated in the development of these (e), the distribution rules in section or third-party administrators who are regulations. 401(a)(9) are applied to section 403(b) responsible for providing benefits under List of Subjects in 26 CFR Part 1 contracts in accordance with the the plan. provisions in § 1.408–8 for purposes of DATES: Effective date. These regulations Income taxes, Reporting and determining required minimum recordkeeping requirements. are effective on September 8, 2009. distributions. Applicability date. The sections of Adoption of Amendments to the * * * * * these regulations that provide guidance Regulations on employer comparable contributions (8) Special rule for governmental ■Accordingly, 26 CFR part 1 is plans. A section 403(b) contract that is to HSAs under section 4980G apply to amended as follows: part of a governmental plan (within the employer contributions made on or after meaning of section 414(d)) is treated as January 1, 2010. The sections of these PART 1—INCOME TAXES regulations that provide guidance having complied with section 401(a)(9) relating to the excise tax under sections ■ Paragraph 1. The authority citation for all years to which section 401(a)(9) 4980B, 4980D, 4980E and 4980G apply for part 1 continues to read in part as applies to the contract, if the contract to any Form 8928 that is due on or after follows: complies with a reasonable and good January 1, 2010. Authority: 26 U.S.C. 7805 * * * faith interpretation of section 401(a)(9). FOR FURTHER INFORMATION CONTACT: * * * * * Concerning the final regulations as they ■ Par. 2. Section 1.401(a)(9)–1 is amended by adding a new paragraph (d) Linda E. Stiff, relate to sections 4980E or 4980G, to A–2 as follows: Mireille Khoury at (202) 622–6080; and Deputy Commissioner for Services and concerning the final regulations as they Enforcement. § 1.401(a)(9)–1 Minimum distribution relate to section 4980B or 4980D, Russ CPrice-Sewell on DSKGBLS3C1PROD with RULES requirement in general. Approved: August 20, 2009. Weinheimer at (202) 622–6080 (not toll- * * * * * Michael Mundaca, free numbers). A–2. * * * Acting Assistant Secretary of the Treasury SUPPLEMENTARY INFORMATION: (d) Special rule for governmental (Tax Policy). plans. Notwithstanding anything to the [FR Doc. E9–21453 Filed 9–4–09; 8:45 am] Paperwork Reduction Act contrary in this A–2, a governmental BILLING CODE 4830–01–P The collection of information plan (within the meaning of section contained in these regulations has been 414(d)), or an eligible governmental reviewed and approved by the Office of VerDate Nov<24>2008 14:52 Sep 04, 2009 Jkt 217001 PO 00000 Frm 00016 Fmt 4700 Sfmt 4700 E:FRFM08SER1.SGM 08SER1
  2. 2. Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Rules and Regulations 45995 Management and Budget in accordance maintained by an employer with 20 or comparability rules that allows, but with the Paperwork Reduction Act of more employees must comply with does not require, employers to make 1995 (44 U.S.C. 3507(d)), under control continuation coverage requirements. If a larger contributions to the HSAs of number 1545–2146. The collection of plan does not satisfy these nonhighly compensated employees than information in these final regulations is requirements, an excise tax is imposed the employer makes to the HSAs of in § 54.6011–2. The collection of of $100 per day per affected beneficiary. highly compensated employees. The information results from the Final regulations under section 4980B final regulations address this exception requirement to file a return for the have been published, including to comparability in § 54.4980G–4 and payment of the excise tax under section provisions concerning the excise tax, provide that employer contributions to 4980B, 4980D, 4980E, or 4980G of the but no return filing requirement has the HSAs of nonhighly compensated Code. The likely respondents are previously been imposed. See employees may be larger than employer employers that contribute to employees’ § 54.4980B–2, Q&A–9 and Q&A–10. contributions to the HSAs of highly HSAs and Archer MSAs, employers or Moreover, under chapter 100 of the compensated employees with employee organizations that sponsor a Code, group health plans must comply comparable coverage during a period. group health plan, and certain third with various requirements, including Conversely, employer contributions to parties such as insurance companies or limitations on preexisting condition the HSAs of highly compensated HMOs or third-party administrators who exclusions, certification of creditable employees may not exceed employer are responsible for providing benefits coverage, special enrollments, contributions to the HSAs of nonhighly under the plan. prohibitions against discrimination compensated employees with An agency may not conduct or based on a health factor (including comparable coverage during a period. sponsor, and a person is not required to genetic information), parity between The comparability rules still apply respond to, a collection of information mental health benefits and medical/ with respect to contributions to the unless it displays a valid control surgical benefits, minimum hospital HSAs of all nonhighly compensated number assigned by the Office of lengths of stay in connection with employees who are comparable Management and Budget. Books or childbirth, and continued coverage for participating employees (eligible records relating to a collection of post-secondary students with a serious individuals who are in the same information must be retained as long as medical condition. If a plan does not category of employees with the same their contents might become material in satisfy any of these requirements under category of high deductible health plan the administration of any internal chapter 100, section 4980D imposes an (HDHP) coverage) and an employer revenue law. Generally, tax returns and excise tax of $100 per day per affected must make comparable contributions to tax return information are confidential, individual. Regulations interpreting the the HSA of each nonhighly as required by 26 U.S.C. 6103. substantive requirements of chapter 100 compensated employee who is a have previously been published, but no comparable participating employee Background regulations have been published during the calendar year. Similarly, the This document contains final comparability rules still apply with amendments to the Excise Tax concerning the excise tax under section 4980D. respect to contributions to the HSAs of Regulations (26 CFR part 54) under all highly compensated employees who On July 16, 2008, proposed section 4980G of the Code, as amended are comparable participating employees regulations (REG–120476–07) were by Sections 302 and 305 of the Tax and an employer must make comparable published in the Federal Register (73 Relief and Health Care Act of 2006 (the contributions to the HSA of each highly Act), Public Law 109–432, under FR 40793) addressing comparable contributions to nonhighly compensated compensated employee who is a paragraph (d) of section 4980G of the comparable participating employee Code, as enacted by section 306 of the employees. The proposed regulations also provided guidance for employers during the calendar year. Collectively Act, and under Section 4980E of the bargained employees are disregarded for Code. that offer qualified HSA distributions and for employers that make the purposes of section 4980G, as are HSA Under section 4980G, an excise tax is contributions made through a cafeteria imposed on an employer that fails to maximum annual HSA contribution on behalf of all employees who are eligible plan. make comparable contributions to the For purposes of section 4980G(d), HSAs of its employees. On July 31, individuals on the first day of the last highly compensated employee is 2006, final regulations on comparability month of the employees’ taxable year. defined under section 414(q) and were published in the Federal Register, Finally, the proposed regulations includes any employee who was (1) a 72 FR 30501 (2007–26 IRB 1495), TD provided guidance on the requirement five-percent owner at any time during 9277. In addition, on April 17, 2008, of a return to accompany payment of the the year or the preceding year; or (2) for final regulations were published in the excise taxes under sections 4980B, the preceding year, (A) had Federal Register, 73 FR 20794 (2008–20 4980D, 4980E, and 4980G and the time compensation from the employer in IRB 975), TD 9393, providing guidance for filing that return. These final excess of $110,000 (for 2009, indexed on employer comparable contributions regulations adopt the provisions of the for inflation) and (B) if elected by the to HSAs in instances where an proposed regulations without employer, was in the group consisting of employee has not established an HSA substantive revision. The final the top 20 percent of employees when by December 31st and in instances regulations make certain minor ranked based on compensation. where an employer accelerates clarifying changes to the rules of the Nonhighly compensated employees are CPrice-Sewell on DSKGBLS3C1PROD with RULES contributions for the calendar year for proposed regulations. employees that are not highly employees who have incurred qualified Explanation of Provisions and compensated employees. medical expenses. See § 601.601(d)(2). Summary of Comments This document also contains final Maximum HSA Contribution Permitted amendments to the Excise Tax Special Rule for Contributions to for Employees Who Become Eligible Regulations (26 CFR part 54) under Nonhighly Compensated Employees Individuals Mid-Year sections 4980B and 4980D. Under Paragraph (d) of section 4980G Section 305 of the Act provides that section 4980B, group health plans provides an exception to the individuals who are eligible individuals VerDate Nov<24>2008 14:52 Sep 04, 2009 Jkt 217001 PO 00000 Frm 00017 Fmt 4700 Sfmt 4700 E:FRFM08SER1.SGM 08SER1
  3. 3. 45996 Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Rules and Regulations on the first day of the last month of the qualified HSA distribution is a direct Two comments were received employees’ taxable year (December 1 for distribution of an amount from a health regarding the reporting and filing of the calendar year taxpayers) may make or flexible spending arrangement (health excise taxes under sections 4980B, have made on their behalf the maximum FSA) or a health reimbursement 4980D, 4980E, and 4980G. One annual HSA contribution based on their arrangement (HRA) to an HSA. The commentator was concerned that the HDHP coverage (self only or family) on distribution must not exceed the lesser noncompliance period under section that date. A portion of the contribution of the balance in the health FSA or HRA 4980B or 4980D could extend beyond is included in income and subject to an on September 21, 2006, or as of the date the due date for filing the excise tax additional 10 percent tax if the of the distribution. Section 54.4980G–7 return and suggested that the due date individual fails to remain an eligible of the final regulations provides that ifbe extended to 90 days after the end of individual for 12 months after the last an employer offers qualified HSA the noncompliance period. It is true that month of the taxable year. See section distributions to any employee who is an the noncompliance period under section 223(b)(8). Section 54.4980G–6 of the eligible individual covered under any 4980B, for example, could extend over final regulations provides that the HDHP, the employer must offer four or more taxable years of the person employer can contribute up to this qualified HSA distributions to all responsible for payment of the tax. maximum contribution on behalf of all employees who are eligible individuals Therefore, extending the due date until employees who are eligible individuals covered under any HDHP. However, an 90 days after the end of the on the first day of the last month of the employer that offers qualified HSA noncompliance period would in some employees’ taxable year (December 1 for distributions only to employees who are cases defer the obligation to pay the calendar year taxpayers), including eligible individuals covered under the excise tax for over four years, which employees who became eligible employer’s HDHP is not required to would not be in the interest of sound tax individuals after January 1st of the offer qualified HSA distributions to administration. As such, the final calendar year and eligible individuals employees who are eligible individuals regulations do not adopt this change. who were hired after January 1st of the but are not covered under the Another commentator noted that the calendar year (both such classes of employer’s HDHP. excise tax might be due before the individuals are hereinafter referred to as person responsible for paying it had Reporting and Payment of the Excise even discovered that a failure under ‘‘mid-year eligible individuals’’). An Tax Under Section 4980B, 4980D, 4980E section 4980B or 4980D had occurred. employer who makes the maximum or 4980G However, this concern is mitigated by calendar year HSA contribution, or who contributes more than a pro-rata The regulations prescribe the manner the fact that sections 4980B and 4980D amount, on behalf of employees who are and method of paying the excise taxes provide that the excise tax does not mid-year eligible individuals will not imposed under section 4980B, 4980D, apply for any period for which the fail to satisfy comparability merely 4980E, or 4980G. The final regulations, responsible party did not know, or because some employees will have like the proposed regulations, provide exercising reasonable diligence would received more contributions on a that these excise taxes must be reported not have known, that the failure existed. monthly basis than employees who on Form 8928, ‘‘Return of Certain Excise Also, under sections 4980B and 4980D, worked the entire calendar year. Taxes Under Chapter 43 of the Internal the excise tax does not apply if the Employers are not required to make Revenue Code.’’ The excise tax under failure is corrected (that is, the failure is these greater than pro-rata contributions section 4980B, 4980D, 4980E or 4980G retroactively undone to the extent and may instead pro-rate contributions must be paid at the time prescribed for possible and the affected beneficiary is based on the number of months that an filing of the excise tax return (without placed in a financial position as good as individual was both employed by the extensions). With respect to the excise the beneficiary would have been had the employer and an eligible individual. tax under section 4980B or 4980D for failure not occurred). However, if an employer contributes employers and third parties such as Finally, a commentator also stated more than the monthly pro-rata amount insurers or third party administrators, that there are some uncertainties about for the calendar year to the HSA of any the return is due on or before the due the application of the excise tax rules to employee who is a mid-year eligible date for filing the person’s Federal various situations that could arise under individual, the employer must then income tax return. An extension to file section 4980B. The commentator contribute, on an equal and uniform the person’s income tax return does not suggested that the filing and payment basis, a greater than pro-rata amount to extend the date for filing Form 8928. requirement for the excise tax under the HSAs of all comparable With respect to the excise tax under section 4980B should not apply until participating employees who are mid- section 4980B or 4980D for additional guidance was issued that year eligible individuals. Likewise, if multiemployer or specified multiple addressed these uncertainties. The the employer contributes the maximum employer health plans, the return is due Treasury Department and the IRS annual contribution amount for the on or before the last day of the seventh believe that the statutory and regulatory calendar year to the HSA of any month after the end of the plan year. provisions in this area provide employee who is a mid-year eligible Finally, with respect to the excise tax appropriate guidance. Therefore, the individual, the employer must under section 4980E or 4980G for final regulations do not adopt this contribute that same amount to the noncomparable contributions, the return comment. HSAs of all comparable participating is due on or before the 15th day of the The guidance in the proposed employees who are mid-year eligible fourth month following the calendar regulations relating to the excise taxes CPrice-Sewell on DSKGBLS3C1PROD with RULES individuals. year in which the noncomparable imposed under section 4980B, 4980D, contributions were made. The final 4980E, or 4980G was contained in Q & Special Comparability Rules for regulations also provide guidance A–11 in § 4980B–2, Q & A–1 in Qualified HSA Distributions regarding the place for filing these § 4980D–1, Q & A–1 in § 4980E–1, and Section 302(a) of the Act provides for excise tax returns, the signing of these Q & A–5 in § 4980G–1. The final qualified HSA distributions. See section excise returns, and the time and place regulations provide additional clarifying 106(e) and Notice 2007–22 (2007–10 for paying the tax shown on such information relating to the guidance IRB 670). See § 601.601(d)(2). A returns. previously provided in these Q &As, VerDate Nov<24>2008 14:52 Sep 04, 2009 Jkt 217001 PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 E:FRFM08SER1.SGM 08SER1
  4. 4. Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Rules and Regulations 45997 and the final regulations also Authority: 26 U.S.C. 7805 * * * (c) Due date for filing of return by consolidate this guidance by including Section 54.4980G–6 also issued under 26 multiemployer plans or multiple it under the following sections: U.S.C. 4980G. employer health plans. See § 54.6071– §§ 54.6011–2, 54.6061–1, 54.6071–1, Section 54.4980G–7 also issued under 26 1(b)(2). U.S.C. 4980G. * * * 54.6091–1 and 54.6151–1. (d) Effective/applicability date. In the ■ Par. 2. Section 54.4980B–0 is case of an employer or other person Effective/Applicability Date amended by adding a new Q–11 to mentioned in paragraph (b) of this Q & The sections of these regulations that § 54.4980B–2 in the list of questions to A–1, the rules in this Q & A–1 are provide guidance on employer read as follows: effective for taxable years beginning on comparable contributions to HSAs or after January 1, 2010. In the case of under section 4980G apply to employer § 54.4980B–0 Table of contents. a plan mentioned in paragraph (c) of contributions made on or after January * * * * * this Q & A–1, the rules in this Q & A– 1, 2010. 1 are effective for plan years beginning The sections of these regulations that List of Questions on or after January 1, 2010. provide guidance relating to the excise * * * * * ■ Par. 5. Section 54.4980E–1 is added to tax under sections 4980B, 4980D, 4980E § 54.4980B–2 Plans that must comply. read as follows: and 4980G apply to any Form 8928 that is due on or after January 1, 2010. * * * * * § 54.4980E–1 Requirement of return and Q–11: If a person is liable for the time for filing of the excise tax under Special Analyses excise tax under section 4980B, what section 4980E. It has been determined that this form must the person file and what is Q–1: If a person is liable for the excise Treasury Decision is not a significant the due date for the filing and payment tax under section 4980E, what form regulatory action as defined in of the excise tax? must the person file and what is the due Executive Order 12866. Therefore, a * * * * * date for the filing and payment of the regulatory assessment is not required. It excise tax? also has been determined that section ■ Par. 3. Section 54.4980B–2 is A–1: (a) In general. See §§ 54.6011–2, 553(b) of the Administrative Procedure amended by adding a new Q&A–11 to 54.6151–1 and 54.6071–1(c). Act (5 U.S.C. chapter 5) does not apply read as follows: (b) Effective/applicability date. The to these regulations. It is hereby rules in this Q & A–1 are effective for § 54.4980B–2 Plans that must comply. certified that the collection of plan years beginning on or after January information in these regulations will not * * * * * Q–11: If a person is liable for the 1, 2010. have a significant economic impact on ■ Par. 6. Section 54.4980G–1 is a substantial number of small entities. excise tax under section 4980B, what form must the person file and what is amended by: Therefore, a Regulatory Flexibility ■ 1. Revising the last sentence in A–1 Analysis under the Regulatory the due date for the filing and payment of the excise tax? and adding a new sentence at the end Flexibility Act (5 U.S.C. chapter 6) is of paragraph (a) in A–2. A–11: (a) In general. See §§ 54.6011– not required. Pursuant to section 7805(f) ■ 2. Adding a new Q & A–5. 2 and 54.6151–1. of the Code, the notice of proposed The revisions and addition read as (b) Due date for filing of return by rulemaking preceding this regulation follows: employers or other persons responsible was submitted to the Chief Counsel for for benefits under a group health plan. § 54.4980G–1 Failure of employer to make Advocacy of the Small Business See § 54.6071–1(a)(1). comparable health savings account Administration for comment on its (c) Due date for filing of return by contributions. impact on small business. multiemployer plans. See § 54.6071– * * * * * Drafting Information 1(a)(2). A–1: * * * But see Q & A–6 in (d) Effective/applicability date. In the § 54.4980G–3 for treatment of The principal authors of these final case of an employer or other person collectively bargained employees and Q regulations are Mireille Khoury and mentioned in paragraph (b) of this Q & & A–1 in § 54.4980G–6 for the rules Russ Weinheimer, Office of Division A–11, the rules in this Q & A–11 are allowing larger comparable Counsel/Associate Chief Counsel (Tax effective for taxable years beginning on contributions to nonhighly compensated Exempt and Government Entities), or after January 1, 2010. In the case of employees. Internal Revenue Service. However, a plan mentioned in paragraph (c) of personnel from other offices of the IRS * * * * * this Q & A–11, the rules in this Q & A– and Treasury Department participated A–2: (a) * * * See also § 54.4980G–6 11 are effective for plan years beginning in their development. for the rules allowing larger comparable on or after January 1, 2010. List of Subjects in 26 CFR Part 54 contributions to nonhighly compensated ■ Par. 4. Section 54.4980D–1 is added employees. Excise taxes, Pensions, Reporting and to read as follows: * * * * * recordkeeping requirements. Q–5: If a person is liable for the excise § 54.4980D–1 Requirement of return and Adoption of Amendment to the time for filing of the excise tax under tax under section 4980G, what form Regulations section 4980D. must the person file and what is the due Q–1: If a person is liable for the excise date for the filing and payment of the CPrice-Sewell on DSKGBLS3C1PROD with RULES ■Accordingly, 26 CFR part 54 is tax under section 4980D, what form excise tax? amended as follows: must the person file and what is the due A–5: (a) In general. §§ 54.6011–2, PART 54—PENSION EXCISE TAXES date for the filing and payment of the 54.6151–1 and 54.6071–1(d). excise tax? (b) Effective/applicability date. The ■ Paragraph 1. The authority citation A–1: (a) In general. See §§ 54.6011–2 rules in this Q & A–5 are effective for for part 54 is amended by adding entries and 54.6151–1. employer contributions made for in numerical order to read in part as (b) Due date for filing of return by calendar years beginning on or after follows: employers. See § 54.6071–1(b)(1). January 1, 2010. VerDate Nov<24>2008 14:52 Sep 04, 2009 Jkt 217001 PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 E:FRFM08SER1.SGM 08SER1
  5. 5. 45998 Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Rules and Regulations ■ Par. 7. Section 54.4980G–3 is made on behalf of an eligible individual 2010, Employer G contributes $1,000 to the amended by: who is hired after January 1st or an HSA of Employee B. Employer Q does not ■ 1. Revising the section heading. employee who becomes an eligible make any other contributions for the 2010 ■ 2. Revising the introductory text in individual after January 1st. Employers calendar year. Employer Q’s contributions satisfy the comparability rules. paragraph (a) of A–5. are not required to provide more than a Example 2. For the 2010 calendar year, ■ 3. Adding a new sentence at the end pro-rata contribution based on the Employer R only has two employees, of paragraph (c) of A–5 and paragraph number of months that an individual Employee C and Employee D. Employee C, (a) of A–9. was an eligible individual and an eligible individual with family HDHP The revision and additions read as employed by the employer during the coverage, works for Employer R for the entire follows: year. However, if an employer calendar year. Employee D, an eligible contributes more than a pro-rata amount individual with family HDHP coverage works § 54.4980G–3 Failure of employer to make for Employer R from July 1st through comparable health savings account for the calendar year to the HSA of any eligible individual who is hired after December 31st. Employer R contributes contributions. $1,200 for the calendar year to the HSA of January 1st of the calendar year or any Employee C and $600 to the HSA of * * * * * employee who becomes an eligible Employee D. Employer R does not make any A–5: (a) Categories. The categories of individual any time after January 1st of other contributions for the 2010 calendar employees for comparability testing are the calendar year, the employer must year. Employer R’s contributions satisfy the as follows (but see Q & A–6 of this contribute that same amount on an comparability rules. section for the treatment of collectively equal and uniform basis to the HSAs of (j) Effective/applicability date. The bargained employees and Q & A–1 of all comparable participating employees rules in paragraphs (h) and (i) of Q & A– § 54.4980G–6 for a special rule for (as defined in Q & A–1 in § 54.4980G– 2 are effective for employer contributions made to the HSAs of 1) who are hired or become eligible contributions made for calendar years nonhighly compensated employees)— individuals after January 1st of the beginning on or after January 1, 2010. * * * * * calendar year. Likewise, if an employer (c) * * * But see § 54.4980G–6 for a contributes the maximum annual * * * * * special rule for contributions made to contribution amount for the calendar ■ Par. 9. Section 54.4980G–6 is added the HSAs of nonhighly compensated year to the HSA of any eligible to read as follows: employees. individual who is hired after January 1st § 54.4980G–6 Special rule for * * * * * of the calendar year or any employee contributions made to the HSAs of A–9: (a) * * * See § 54.4980G–6 for a who becomes an eligible individual any nonhighly compensated employees. special rule for contributions made to time after January 1st of the calendar Q–1: May an employer make larger the HSAs of nonhighly compensated year, the employer must contribute the contributions to the HSAs of nonhighly employees. maximum annual contribution amount compensated employees than to the * * * * * on an equal and uniform basis to the HSAs of highly compensated ■ Par. 8. Section 54.4980G–4 is HSAs of all comparable participating employees? amended by: employees (as defined in Q & A–1 in A–1: Yes. Employers may make larger ■ 1. Adding a new sentence at the end § 54.4980G–1) who are hired or become HSA contributions for nonhighly of paragraph (a) of A–1. eligible individuals after January 1st of compensated employees who are ■ 2. Adding paragraphs (h), (i) and (j) to the calendar year. An employer who comparable participating employees A–2. makes the maximum calendar year than for highly compensated employees The additions read as follows: contribution or more than a pro-rata who are comparable participating contribution to the HSAs of employees employees. See Q & A–1 in § 54.4980G– § 54.4980G–4 Calculating comparable who become eligible individuals after contributions. 1 for the definition of comparable the first day of the calendar year or participating employee. For purposes of * * * * * eligible individuals who are hired after this section, highly compensated A–1: (a) * * * But see Q & A–1 of the first day of the calendar year will employee is defined under section § 54.4980G–6 for a special rule for not fail to satisfy comparability merely 414(q). Nonhighly compensated contributions made to the HSAs of because some employees will have employees are employees that are not nonhighly compensated employees. received more contributions on a highly compensated employees. The * * * * * monthly basis than employees who comparability rules continue to apply A–2: * * * worked the entire calendar year. with respect to contributions to the * * * * * (i) Examples. The following examples HSAs of all nonhighly compensated (h) Maximum contribution permitted illustrate the rules in paragraph (h) in employees. Employers must make for all employees who are eligible this Q & A–2. In the following examples, comparable contributions for the individuals during the last month of the no contributions are made through a calendar year to the HSA of each taxable year. An employer may section 125 cafeteria plan and none of nonhighly compensated employee who contribute up to the maximum annual the employees are covered by a is a comparable participating employee. contribution amount for the calendar collective bargaining agreement. Q–2: May an employer make larger year (based on the employees’ HDHP Example 1. On January 1, 2010, Employer contributions to the HSAs of highly coverage) to the HSAs of all employees Q contributes $1,000 for the calendar year to compensated employees than to the CPrice-Sewell on DSKGBLS3C1PROD with RULES who are eligible individuals on the first the HSAs of employees who are eligible HSAs of nonhighly compensated day of the last month of the employees’ individuals with family HDHP coverage. In employees? taxable year, including employees who mid-March of the same year, Employer Q A–2: (a) In general. No. Employer hires Employee A, an eligible individual with worked for the employer for less than family HDHP coverage. On April 1, 2010, contributions to HSAs for highly the entire calendar year and employees Employer Q contributes $1,000 to the HSA of compensated employees who are who became eligible individuals after Employee A. In September of the same year, comparable participating employees January 1st of the calendar year. For Employee B becomes an eligible individual may not be larger than employer HSA example, such contribution may be with family HDHP coverage. On October 1, contributions for nonhighly VerDate Nov<24>2008 14:52 Sep 04, 2009 Jkt 217001 PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 E:FRFM08SER1.SGM 08SER1
  6. 6. Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Rules and Regulations 45999 compensated employees who are HSA contributions for calendar year 2010 do employee who is an eligible individual with comparable participating employees. not satisfy the comparability rules. self plus two HDHP coverage. The deductible The comparability rules continue to Example 5. In 2010, Employer E for both the self plus one HDHP and the self contributes $1,000 for the calendar year to plus two HDHP is $2,000. Employee A, an apply with respect to contributions to the HSA of each full-time non-management eligible individual, is a nonhighly the HSAs of all highly compensated nonhighly compensated employee who is an compensated employee with self plus one employees. Employers must make eligible individual with family HDHP coverage. Employee B, an eligible individual, comparable contributions for the coverage. Employer E also contributes $500 is a highly compensated employee with self calendar year to the HSA of each highly for the calendar year to the HSA of each full- plus two coverage. For the 2010 calendar compensated comparable participating time management nonhighly compensated year, Employer F contributes $1,000 to employee. See Q & A–1 in § 54.4980G– employee who is an eligible individual with Employee A’s HSA and $1,500 to Employee 1 for the definition of comparable family HDHP coverage. The nonhighly B’s HSA. Employer F’s HSA contributions participating employee. compensated employees did not receive satisfy the comparability rules. (b) Examples. The following examples comparable contributions, and, therefore, Employer E’s HSA contributions for calendar Q–4: What is the effective date for the illustrate the rules in Q & A–1 and Q & year 2010 do not satisfy the comparability rules in this section? A–2 of this section. No contributions are rules. A–4: The rules in this section are made through a section 125 cafeteria effective for employer contributions plan and none of the employees in the Q–3: May an employer make larger made for calendar years beginning on or following examples are covered by a HSA contributions for employees with after January 1, 2010. collective bargaining agreement. All of self plus two HDHP coverage than ■ Par. 10. Section 54.4980G–7 is added the employees in the following employees with self plus one HDHP coverage even if the employees with self to read as follows: examples have the same HDHP deductible for the same category of plus two are all highly compensated § 54.4980G–7 Special comparability rules coverage. employees and the employees with self for qualified HSA distributions contributed plus one are all nonhighly compensated to HSAs on or after December 20, 2006 and Example 1. In 2010, Employer A employees? before January 1, 2012. contributes $1,000 for the calendar year to A–3: (a) Yes. Q & A–1 in § 54.4980G– the HSA of each full-time nonhighly Q–1: How do the comparability rules compensated employee who is an eligible 4 provides that an employer’s of section 4980G apply to qualified HSA individual with self-only HDHP coverage. contribution with respect to the self distributions under section 106(e)(2)? Employer A makes no contribution to the plus two category of HDHP coverage A–1: The comparability rules of HSA of any full-time highly compensated may not be less than the contribution section 4980G do not apply to amounts employee who is an eligible individual with with respect to the self plus one contributed to employee HSAs through self-only HDHP coverage. Employer A’s HSA category and the contribution with qualified HSA distributions. However, contributions for calendar year 2010 satisfy respect to the self plus three or more in order to satisfy the comparability the comparability rules. category may not be less than the rules, if an employer offers qualified Example 2. In 2010, Employer B contributes $2,000 for the calendar year to contribution with respect to the self HSA distributions, as defined in section the HSA of each full-time nonhighly plus two category. Therefore, the 106(e)(2), to any employee who is an compensated employee who is an eligible comparability rules are not violated if eligible individual covered under any individual with self-only HDHP coverage. an employer makes a larger HSA HDHP, the employer must offer Employer B also contributes $1,000 for the contribution for the self plus two qualified HSA distributions to all calendar year to the HSA of each full-time category of HDHP coverage than to self employees who are eligible individuals highly compensated employee who is an plus one coverage, even if the covered under any HDHP. However, if eligible individual with self-only HDHP employees with self plus two coverage an employer offers qualified HSA coverage. Employer B’s HSA contributions are all highly compensated employees distributions only to employees who are for calendar year 2010 satisfy the comparability rules. and the employees with self plus one eligible individuals covered under the Example 3. In 2010, Employer C coverage are all nonhighly compensated employer’s HDHP, the employer is not contributes $1,000 for the calendar year to employees. Likewise, the comparability required to offer qualified HSA the HSA of each full-time nonhighly rules are not violated if an employer distributions to employees who are compensated employee who is an eligible makes a larger HSA contribution for the eligible individuals but are not covered individual with self-only HDHP coverage. self plus three category of HDHP under the employer’s HDHP. Employer C contributes $2,000 for the coverage than to self plus two coverage, Q–2: What is the effective date for the calendar year to the HSA of each full-time even if the employees with self plus rules in this section? highly compensated employee who is an three coverage are all highly A–2: The rules in this section are eligible individual with self-only HDHP effective for are effective for employer coverage. Employer C’s HSA contributions compensated employees and the for calendar year 2010 do not satisfy the employees with self plus two coverage contributions made for calendar years comparability rules. are all nonhighly compensated beginning on or after January 1, 2010. Example 4. In 2010, Employer D employees. ■ Par. 11. Section 54.6011–2 is added to contributes $1,000 for the calendar year to (b) Example. The following example read as follows: the HSA of each full-time nonhighly illustrates the rules in paragraph (a) of compensated employee who is an eligible this Q & A–3. In the following example, § 54.6011–2 General requirement of return, individual with self-only HDHP coverage. no contributions are made through a statement, or list. Employer D also contributes $1,000 to the section 125 cafeteria plan and none of Effective for any Form 8928 that is CPrice-Sewell on DSKGBLS3C1PROD with RULES HSA of each full-time highly compensated the employees are covered by a due on or after January 1, 2010, any employee who is an eligible individual with person liable for tax under section self-only HDHP coverage. In addition, the collective bargaining agreement. 4980B, 4980D, 4980E, or 4980G of the employer contributes an additional $500 to Example. In 2010, Employer F contributes the HSA of each nonhighly compensated $1,000 for the calendar year to the HSA of Code shall file a return with respect to employee who participates in a wellness each full-time employee who is an eligible the tax on Form 8928. The return must program. The nonhighly compensated individual with self plus one HDHP include the information required by employees did not receive comparable coverage. Employer F contributes $1,500 for Form 8928 and the instructions issued contributions, and, therefore, Employer D’s the calendar year to the HSA of each with respect to it. VerDate Nov<24>2008 14:52 Sep 04, 2009 Jkt 217001 PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 E:FRFM08SER1.SGM 08SER1

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