Distributions From an Archer MSA or Medicare+Choice MSA

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Instructions for Forms 1099-SA and 5498-SA

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11:09 - 1-OCT-2007

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2008

Department of the Treasury
Internal Revenue Service

Instructions for Forms
1099-SA and 5498-SA
Section references are to the Internal Revenue Code unless
otherwise noted.

Reminder
In addition to these specific instructions, you should also use
the 2008 General Instructions for Forms 1099, 1098, 5498, and
W-2G. Those general instructions include information about the
following topics.
• Backup withholding.
• Electronic reporting requirements.
• Penalties.
• Who must file (nominee/middleman).
• When and where to file.
• Taxpayer identification numbers.
• Statements to recipients.
• Corrected and void returns.
• Other general topics.
You can get the general instructions from the IRS website at
www.irs.gov or by calling 1-800-TAX-FORM (1-800-829-3676).

Specific Instructions for Form 1099-SA
File Form 1099-SA, Distributions From an HSA, Archer MSA, or
Medicare Advantage MSA, to report distributions made from an
HSA, Archer MSA, or Medicare Advantage MSA (MA MSA).
The distribution may have been paid directly to a medical
service provider or to the account holder. A separate return
must be filed for each plan type.
Transfers. Do not report a trustee-to-trustee transfer from one
Archer MSA or MA MSA to another Archer MSA or MA MSA,
one Archer MSA to an HSA, or from one HSA to another HSA.
For reporting purposes, contributions and rollovers do not
include transfers.
HSA mistaken distributions. If amounts were distributed
during the year from an HSA because of a mistake of fact due
to reasonable cause, the account beneficiary may repay the
mistaken distribution no later than April 15 following the first
year the account beneficiary knew or should have known the
distribution was a mistake. For example, the account
beneficiary reasonably, but mistakenly, believed that an
expense was a qualified medical expense and was reimbursed
for that expense from the HSA. The account beneficiary then
repays the mistaken distribution to the HSA.
Under these circumstances, the distribution is not included in
gross income, is not subject to the 10 percent additional tax,
and the payment is not subject to the excise tax on excess
contributions. Do not treat the repayment as a contribution on
Form 5498-SA.
As the trustee or custodian, you do not have to allow
TIP beneficiaries to return a mistaken distribution to the
HSA. However, if you do allow the return of the
mistaken distribution, you may rely on the account beneficiary’s
statement that the distribution was in fact a mistake. See Notice
2004-50, Q/A-76 which is on page 196 of Internal Revenue
Bulletin 2004-33 available at www.irs.gov/pub/irs-irbs/irb04-33.
pdf. Do not report the mistaken distribution on Form 1099-SA.
Correct any filed Form 1099-SA with the IRS and the account
beneficiary as soon as you become aware of the error. See
Corrected Returns on Paper Forms in the 2008 General
Instructions for Forms 1099, 1098, 5498, and W-2G for more
information.

• The spouse may continue an MA MSA, but no new

contributions may be made to the account, and
• Distributions from an Archer MSA or MA MSA are taxed
under the rules that apply to Archer MSAs, not MA MSAs. For
rules that apply to HSAs, see Notice 2004-2, Q/A-31 which is
on page 269 of Internal Revenue Bulletin 2004-2 at www.irs.
gov/pub/irs-irbs/irb04-02.pdf.
If the beneficiary is not the spouse or there is no named
beneficiary, the account ceases to be an Archer MSA or MA
MSA and the fair market value (FMV) is reported.
Distribution in year of death. If you learn of the account
holder’s death and make a final distribution to the beneficiary in
the year of death, issue a final Form 1099-SA and enter in:
• Box 1, the gross distribution;
• Box 3, code 4 (see page 2); and
• Box 4, the FMV of the account on the date of death.
If the beneficiary is the estate, enter the estate’s name and
taxpayer identification number (TIN) in place of the recipient’s
on the form.
Distribution after year of death. If you learn of the death
of the account holder and make a final distribution after the year
of death, issue a final Form 1099-SA in the year you learned of
the death of the account holder. Enter in:
• Box 1, the gross distribution;
• Box 3, one of the following codes (see page 2):
1 — if the beneficiary is the spouse,
4 — if the beneficiary is the estate, or
6 — if the beneficiary is not the spouse or estate;
• Box 4, the FMV of the account on the date of death.
HSAs. If the account holder dies and:
• The named beneficiary is the surviving spouse, the surviving
spouse becomes the account holder of the HSA.
• If the HSA passes to a person other than the surviving
spouse, the HSA ceases to be an HSA on the date of the
account holder’s death. If there is no designated beneficiary, or
the account passes to the account holder’s estate, the FMV of
the account as of the date of death is required to be reported in
box 4. Follow the rules and coding above under Distribution in
year of death and Distribution after year of death.

Statements to Recipients
If you are required to file Form 1099-SA, you must provide a
statement to the recipient. For more information about the
requirement to furnish a Form 1099-SA or acceptable substitute
statement to recipients, see part M in the 2008 General
Instructions for Forms 1099, 1098, 5498, and W-2G.

Account Number
The account number is required if you have multiple accounts
for a recipient for whom you are filing more than one Form
1099-SA. Additionally, the IRS encourages you to designate an
account number for all Forms 1099-SA that you file. See part L
in the 2008 General Instructions for Forms 1099, 1098, 5498,
and W-2G.

Box 1. Gross Distribution
Enter the total amount of the distribution. Include any earnings
separately reported in box 2. You are not required to determine
the taxable amount of a distribution. Do not report a negative
amount in box 1.

Box 2. Earnings on Excess Contributions

Death of Account Holder
Archer MSAs and MA MSAs. If the account holder dies and
the beneficiary is the spouse:
• The spouse becomes the account holder of the Archer MSA,

Enter the total earnings distributed with any excess HSA or
Archer MSA contributions returned by the due date of the
account holder’s tax return. Include this amount in box 1.
Report earnings on other distributions only in box 1. Do not

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Instructions for Forms 1099-SA and 5498-SA

11:09 - 1-OCT-2007

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

report excess MA MSA contributions returned to the Secretary
of Health and Human Services or his or her representative.
For HSAs and Archer MSAs, if you are reporting
TIP earnings on a distribution of excess contributions, use
the method under Regulations section 1.408-11 for
calculating the net income attributable to IRA contributions that
are distributed as a returned contribution. If the amount in box 2
includes earnings on excess contributions, enter distribution
code 2 in box 3.

a health reimbursement arrangement (HRA) or health flexible
spending arrangement (FSA) to an HSA.

Total Distribution, No Contributions
Generally, if a total distribution was made from an HSA or
Archer MSA during the year and no contributions were made for
that year, you need not file Form 5498-SA nor furnish a
statement to the participant to reflect that the FMV on
December 31 was zero.

Box 3. Distribution Code

Death of Account Holder

Enter the appropriate distribution code from the list below that
shows the type of distribution.

In the year an HSA, Archer MSA, or MA MSA owner dies,
generally you must file a Form 5498-SA and furnish a statement
for the decedent. If the beneficiary is the spouse:
• The spouse becomes the account holder of the HSA or
Archer MSA,
• The spouse may continue an MA MSA, but no new
contributions may be made to the account, and
• Distributions from an Archer MSA or MA MSA are taxed
under the rules that apply to Archer MSAs, not MA MSAs. For
rules that apply to HSAs, see Notice 2004-2, Q/A-31 which is
on page 269 of Internal Revenue Bulletin 2004-2 at www.irs.
gov/pub/irs-irbs/irb04-02.pdf.
If the beneficiary is not the spouse or there is no named
beneficiary, the account ceases to be an HSA, Archer MSA, or
MA MSA.

1 — Normal distributions

Use this code for normal distributions to
the account holder and any direct
payments to a medical service provider.
Use this code if no other code applies.
Also, see Distribution after year of death
on page 1.

2 — Excess contributions

Use this code for distributions of excess
HSA or Archer MSA contributions. Do not
use this code for excess MA MSA
contributions returned to the Secretary of
Health and Human Services or his or her
representative.

3 — Disability

Use this code if you made distributions
after the account holder was disabled
(see section 72(m)(7)).

4 — Death distribution
other than code 6

Use this code for payments to a
decedent’s estate in the year of death.
Also use this code for payments to an
estate after the year of death. Do not use
with code 6. See Death of Account Holder
on page 1.

5 — Prohibited transaction

See sections 220(e)(2) and 223(e)(2).

6 — Death distribution after
year of death to a
nonspouse beneficiary

Use this code for payments to a
decedent’s nonspouse beneficiary, other
than an estate, after the year of death. Do
not use with code 4.

Statements to Participants
If you are required to file Form 5498-SA, you must provide a
statement to the participant (generally Copy B) by June 1, 2009.
You may, but you are not required to, provide participants with
a statement of the December 31, 2008, FMV of the participant’s
account by February 2, 2009. For more information about
statements to participants, see part M in the 2008 General
Instructions for Forms 1099, 1098, 5498, and W-2G.

Account Number
The account number is required if you have multiple accounts
for a recipient for whom you are filing more than one Form
5498-SA. Additionally, the IRS encourages you to designate an
account number for all Forms 5498-SA that you file. See part L
in the 2008 General Instructions for Forms 1099, 1098, 5498,
and W-2G.

Box 4. FMV on Date of Death
If the account holder died, enter the FMV of the account on the
date of death. See Death of Account Holder on page 1.

Box 5. Checkbox

Box 1. Employee or Self-Employed Person’s Archer
MSA Contributions Made in 2008 and 2009 for 2008

Check the box to indicate if this distribution was from an HSA,
Archer MSA, or MA MSA.

Enter the employee’s or self-employed person’s regular
contributions to the Archer MSA made in 2008 and through
April 15, 2009, for 2008. Report gross contributions, including
any excess contributions, even if the excess contributions were
withdrawn. No HSA information is to be reported in box 1.

Specific Instructions for Form 5498-SA
File Form 5498-SA, HSA, Archer MSA, or Medicare Advantage
MSA Information, with the IRS on or before June 1, 2009, for
each person for whom you maintained an HSA, Archer MSA, or
Medicare Advantage MSA (MA MSA) during 2008. You are
required to file if you are the trustee or custodian of an HSA,
Archer MSA, or MA MSA. A separate form is required for each
type of plan.
For HSA or Archer MSA contributions made between
January 1, 2009, and April 15, 2009, you should obtain the
participant’s designation of the year for which the contributions
are made.
For repayment of a mistaken distribution amount, see HSA
mistaken distributions on page 1.

Box 2. Total Contributions Made in 2008
Enter the total HSA or Archer MSA contributions made in 2008.
Include any contribution made in 2008 for 2007. Also include
qualified HSA funding distributions (trustee-to-trustee transfers
from an IRA to an HSA under section 408(d)(9)) received by
you during 2008. You may, but you are not required to, report
the total MA MSA contributions the Secretary of Health and
Human Services or his or her representative made in 2008.

Box 3. Total HSA or Archer MSA Contributions Made
in 2009 for 2008
Enter the total HSA or Archer MSA contributions made in 2009
for 2008.

Rollovers

Box 4. Rollover Contributions

You must report the receipt of a rollover from one Archer MSA
to another Archer MSA, and receipt of a rollover from an Archer
MSA or an HSA to an HSA in box 4.

Enter rollover contributions to the HSA or Archer MSA received
by you during 2008. Include qualified HSA distributions (direct
transfers of employer contributions from flexible spending
arrangements (FSAs) and health reimbursement arrangements
(HRAs) to an HSA under section 106(e)).

Transfers
Do not report a trustee-to-trustee transfer from one Archer MSA
or MA MSA to another Archer MSA or MA MSA, from an Archer
MSA to an HSA, or from one HSA to another HSA. For
reporting purposes, contributions and rollovers do not include
these transfers. However, see box 2 below for the reporting of a
trustee-to-trustee transfer from an IRA to an HSA and box 4 for
the reporting of a direct transfer of employer contributions from

Box 5. Fair Market Value of HSA, Archer MSA, or MA
MSA
Enter the FMV of the account on December 31, 2008.

Box 6. Checkbox
Check the box to indicate if this account is an HSA, Archer
MSA, or MA MSA.

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