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CU System
IRS forms for HSAs updated
MADISON, Wis.  (1/30/12)--The Internal Revenue Service (IRS) has released updated model Health Savings Account (HSA) documents.  

Form 5305-B, Health Savings Trust Account, and Form 5305-C, Health Savings Custodial Account are the IRS versions of HSA plan agreements, which are used to establish HSAs. These updated model documents, with a revision date of December 2011, replace the November 2007 versions. Most credit unions that offer HSAs use the IRS model HSA agreements as the basis for their opening documents, according to Ascensus HSA programs, based in Madison, Wis.

The new IRS model agreements incorporate a number of HSA-related changes that have occurred since the IRS last updated its model HSA agreements.

These changes include updated cost-of-living adjustments to reflect the 2011 and 2012 annual HSA contribution limits, as well as the penalty increase from 10% to 20% for distributions not used for qualified medical expenses.

The IRS did not remove the qualified HSA funding distribution language from the forms, even though provisions allowing trustee-to-trustee transfers from health flexible spending accounts (FSAs) and health reimbursement accounts (HRAs) to HSAs expired on Dec. 31.

The IRS has not announced whether HSA trustees or custodians must begin using the new model or if existing HSA agreements must be amended for these changes.

"We anticipate that credit unions will want to begin using the new documents because the November 2007 model HSA agreements are outdated due to the law changes," said Dennis Zuehlke, compliance manager for the Ascensus HSA programs. Ascensus is a provider of HSA and IRA compliance solutions to the credit union marketplace.

Providing up-to-date HSA documents is critical to HSA program compliance, and by adopting the latest model HSAs and amending existing HSA agreements, credit unions can provide their members with accurate HSA documents that reflect the current state of the law, Zuehlke said.


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