Tax News

CCH (cch.taxgroup.com) reports:

  The IRS has issued guidance on the proper tax treatment of qualified health savings account (HSA) funding distributions, effective for tax years beginning after 2006. A qualified HSA funding distribution is a one-time, direct transfer from an individual's traditional individual retirement account (IRA) or Roth IRA to the individual's HSA. In general, such distributions are excluded from gross income and are not subject to the 10-percent early distribution penalty under Code Sec. 72(t).

  The IRS guidance reflects the rules provided in Code Sec. 408(d)(9), as added by the Tax Relief and Health Care Act of 2006 (P.L. 109-432), and includes numerous examples that illustrate how these rules should be applied. Among the Code Sec. 408(d)(9) rules discussed in the guidance are the tax treatment of qualified HSA funding distributions, the restrictions on the types of IRAs from which distributions can be made, the maximum amount of distributions, the number of distributions that are allowed, the procedures for making an IRA-to-HSA transfer, and the testing period rules.

Notice 2008-51, 2008FED ¶46,456

Other References:

 
Code Sec. 223

  CCH Reference - 2008FED ¶12,785.25

 
Code Sec. 408

  CCH Reference - 2008FED ¶18.922.355

  Tax Research Consultant

  CCH Reference - TRC INDIV: 42,462
CCH Reference - TRC INDIV: 42,464
CCH Reference - TRC COMPEN: 45,064.05