Instructions For Forms 1099-Sa And 5498-Sa - 2006 (Page 3 of 25) in pdf

2006

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.

•

The spouse becomes the account holder of the Archer MSA,

Reminder

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The spouse may continue an MA MSA, but no new

contributions may be made to the account, and

In addition to these specific instructions, you should also use

•

Distributions from an Archer MSA or MA MSA are taxed

the 2006 General Instructions for Forms 1099, 1098, 5498, and

under the rules that apply to Archer MSAs, not MA MSAs.

W-2G. Those general instructions include information about:

•

Backup withholding

If the beneficiary is not the spouse or there is no named

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Magnetic media and electronic reporting requirements

beneficiary, the account ceases to be an Archer MSA or MA

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Penalties

MSA and the fair market value (FMV) is reported.

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Who must file (nominee/middleman)

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Distribution in year of death. If you learn of the account

When and where to file

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holder’s death and make a final distribution to the beneficiary in

Taxpayer identification numbers

•

the year of death, issue a final Form 1099-SA and enter in:

Statements to recipients

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Box 1, the gross distribution;

Corrected and void returns

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Box 3, code 4 (see page SA-2); and

Other general topics

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Box 4, the FMV of the account on the date of death.

You can get the general instructions from the IRS website at

If the beneficiary is the estate, enter the estate’s name and

or by calling 1-800-TAX-FORM (1-800-829-3676).

taxpayer identification number (TIN) in place of the recipient’s

on the form.

Specific Instructions for Form 1099-SA

Distribution after year of death. If you learn of the death of

File Form 1099-SA, Distributions From an HSA, Archer MSA, or

the account holder and make a final distribution after the year of

Medicare Advantage MSA, to report distributions made from an

death, issue a final Form 1099-SA in the year you learned of

HSA, Archer MSA, or Medicare Advantage MSA (MA MSA).

the death of the account holder. Enter in:

•

The distribution may have been paid directly to a medical

Box 1, the gross distribution;

•

service provider or to the account holder. A separate return

Box 3, one of the following codes (see below):

must be filed for each plan type.

1 — if the beneficiary is the spouse,

4 — if the beneficiary is the estate, or

Transfers. Do not report a trustee-to-trustee transfer from one

6 — if the beneficiary is not the spouse or estate;

Archer MSA or MA MSA to another Archer MSA or MA MSA,

•

Box 4, the FMV of the account on the date of death.

one Archer MSA to an HSA, or from one HSA to another HSA.

For reporting purposes, contributions and rollovers do not

HSAs. If the account holder dies and:

•

include transfers.

The named beneficiary is the surviving spouse, the surviving

Mistaken distributions. If amounts were distributed during the

spouse becomes the account holder of the HSA.

•

year from an HSA because of a mistake of fact due to

If the HSA passes to a person other than the surviving

reasonable cause, the account beneficiary may repay the

spouse, the HSA ceases to be an HSA on the date of the

mistaken distribution no later than April 15 following the first

account holder’s death. If there is no designated beneficiary, or

year the account beneficiary knew or should have known the

the account passes to the account holder’s estate, the FMV of

distribution was a mistake. For example, the account

the account as of the date of death is required to be reported in

beneficiary reasonably, but mistakenly, believed that an

box 4. Follow the rules and coding above under Distribution in

expense was a qualified medical expense and was reimbursed

year of death and Distribution after year of death.

for that expense from the HSA. The account beneficiary then

repays the mistaken distribution to the HSA.

Statements to Recipients

Under these circumstances, the distribution is not included in

gross income, is not subject to the 10 percent additional tax,

If you are required to file Form 1099-SA, you must provide a

and the payment is not subject to the excise tax on excess

statement to the recipient. For more information about the

contributions. Do not treat the repayment as a contribution on

requirement to furnish a Form 1099-SA or acceptable substitute

Form 5498-SA.

statement to recipients, see part M in the 2006 General

Instructions for Forms 1099, 1098, 5498, and W-2G.

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

Account Number

mistaken contribution, you may rely on the account

beneficiary’s statement that the distribution was in fact a

The account number is required if you have multiple accounts

mistake. See Notice 2004-50, Q/A 76 which is on page 196 of

for a recipient for whom you are filing more than one Form

Internal Revenue Bulletin 2004-33 available at /

1099-SA. Additionally, the IRS encourages you to designate an

pub/irs-irbs/irb04-33.pdf. Do not report the mistaken distribution

account number for all Forms 1099-SA that you file. See part L

on Form 1099-SA. Correct any filed Form 1099-SA with the IRS

in the 2006 General Instructions for Forms 1099, 1098, 5498,

and the account beneficiary as soon as you become aware of

and W-2G.

the error. See Corrected Returns on Paper Forms in the 2006

General Instructions for Forms 1099, 1098, 5498, and W-2G for

more information.

Box 1. Gross Distribution

Enter the total amount of the distribution. Include any earnings

Death of Account Holder

separately reported in box 2. You are not required to determine

Archer MSAs and MA MSAs. If the account holder dies and

the taxable amount of a distribution. Do not report a negative

the beneficiary is the spouse:

amount in box 1.

Cat. No. 38470S

Instructions For Forms 1099-Sa And 5498-Sa - 2006 Page 3

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