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IRS releases updated model HSA agreements
WASHINGTON (12/7/07)--The Internal Revenue Service (IRS) has released updated versions of its model Health Savings Account (HSA) agreements many credit unions use to establish HSAs for their members. The model HSA agreements, Forms 5305-B, Health Savings Trust Account and 5305-C, Health Savings Custodial Account, have been updated to reflect the 2007 and 2008 annual HSA contribution limits and the catch-up contribution limits for 2007, 2008, 2009 and later. The revised agreements also expand the definition of permitted HSA contributions to include direct rollovers from health flexible spending accounts, health reimbursement accounts, and traditional IRAs. These new HSA funding options were created by passage of the Tax Relief and Health Care Act of 2006. The high deductible health plan minimum annual deductibles and annual out-of-pocket maximums were also updated to reflect calendar year 2007 and 2008 limits. The revised model agreements, dated November 2007, replace the previous versions, which have not been updated since their release in August 2004. The IRS has not issued formal guidance on use of the revised model agreements and they have no plans to do so, according to Dennis Zuehlke, compliance manager for CUNA Mutual Group, which serves 80% of credit unions offering HSA programs. “In our discussions with senior IRS staff, we’ve been informed that use of the revised model HSA agreements is optional and that HSAs established under the prior versions of the model HSA agreements need not be amended,” Zuehlke noted. Most forms vendors are expected to update their versions of the model HSA agreements to reflect the new higher contribution limits and funding options. Although not required, credit unions would be well advised to begin using the new agreements as soon as they are available to ensure the information provided to their members is current, according to Zuehlke.


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