Form 5498-SA definition and meaning
Form 5498-SA is a document that reports contributions made to a Health Savings Account (HSA), Archer Medical Savings Account (Archer MSA), or Medicare Advantage Medical Savings Account (MA MSA). This form must be sent to both the Internal Revenue Service (IRS) and the respective account holders.
More about Form 5498-SA and its purpose
The IRS requires that trustees of an HSA, Archer MSA, or MA MSA file Form 5498-SA for each individual for whom they maintain any of these accounts. The form’s main purpose is to report the individual’s annual account contributions.
HSAs and MSAs enable participants to save money (tax-free) to help pay for eligible medical expenses not covered by their health insurance plans. This means participants do not pay taxes on funds put into these accounts, so long as those amounts don’t exceed the legal limits. Similarly, they aren’t taxed on distributions taken from those accounts, to pay for qualified medical expenses.
That said, each account type has its distinct rules. Here’s a brief overview:
- HSA: An individual can independently open an HSA. In the employment context, HSAs are provided by employers that also offer high-deductible health plans. Both the employee and the employer can contribute to an HSA. Employers, regardless of their size, can introduce an HSA option.
- Archer MSA: This savings account is exclusive to the self-employed and businesses with 50 or fewer employees. Either the employer or the employee — but not both — can contribute to an Archer MSA.
- Medicare Advantage MSA: This account is open to anyone eligible for Medicare. Typically, these plans are not available for employers or their employees, and only Medicare can make contributions to the account.
Now, let’s circle back to Form 5498-SA.
Who reports Form 5498-SA
As stated earlier, the trustee managing the HSA or MSA must report the account contributions on Form 5498-SA. This trustee is the legal entity that establishes and administers the HSA or MSA, which can be a bank, credit union, or another qualified financial institution.
Employees participating in these accounts receive Form 5498 directly from the trustee designated by their employer.
When to report Form 5498-SA
Trustees of HSAs, Archer MSAs, and MA MSAs are required to both file Form 5498-SA with the IRS and provide the form to participating individuals by May 31. This deadline encompasses contributions made during the entire tax year. For instance, contributions made in 2023 must be reported to the employee and the IRS via Form 5498-SA by May 31, 2024.
However, for HSAs and Archer MSAs, trustees can also include contributions made between January 1 and April 15 of the following year. Therefore, Form 5498-SA for 2023 might reflect contributions from January 1, 2024, through April 15, 2024, in addition to those made in 2023 — all of which should be reported by May 31, 2024.
Form 5498-SA boxes
- Box 1: Total contributions made by the employee or self-employed individual to their Archer MSA during the regular tax year and up to April 15 of the following year. HSA contributions should not be included in this box.
- Box 2: Total contributions made to the HSA or Archer MSA during the regular tax year (e.g., all of 2023).
- Box 3: Total contributions made to the HSA or Archer MSA in the current year (e.g., January 1, 2024 through April 15, 2024).
- Box 4: Rollover contributions received by the employee or self-employed individual for their respective HSA or Archer MSA during the regular tax year.
- Box 5: The Fair Market Value of the HSA, Archer MSA, or MA MSA as of December 31 of the regular tax year.
- Box 6: The trustee checks this box to specify the type of account (HSA, Archer MSA, or MA MSA).
For further details, refer to the IRS’ instructions for Form 5498-SA.
What employees with an HSA should know about Form 5498-SA
Employees are far more likely to have an HSA than an Archer MSA. As previously mentioned, employees typically aren’t eligible for MA MSAs.
If you have an HSA, here are some insights regarding Form 5498-SA:
- The trustee should not include any employer contributions to your HSA on Form 5498-SA. Instead, your employer should report both its and your HSA contributions in Box 12 of your Form W-2 using code W.
- Your HSA contributions are pre-tax. This means you received a tax break when these amounts were deducted from your paycheck. Consequently, you can’t claim a tax deduction for these contributions when you file your tax return.
- The contributions your employer makes to your HSA are not subject to tax.
- You don’t need Form 5498-SA to file your tax return. The trustee provides this form solely for your information. Be sure to review it carefully and reach out to the trustee if you spot any discrepancies.
- While many trustees mail a hard copy of Form 5498-SA, some also offer online banking services that allow participants to access the form digitally.
- If the account holder passes away during the year, the trustee typically sends the designated beneficiary a copy of Form 5498-SA.
- Your HSA distributions are reported by the trustee on Form 1099-SA, not Form 5498-SA.
- Retain Form 5498-SA for your personal records. Do not attach it to your tax return.
Claiming a Tax Deduction for after-tax contributions
Non-employees, including those who are self-employed, don’t have the advantage of making pre-tax contributions to their HSA or Archer MSA. While their contributions are made with post-tax dollars, they can still claim a tax deduction when filing their tax return. However, any contributions exceeding the legal maximum are not tax-deductible.
Employers will be pleased to know that their contributions to an HSA or Archer MSA are not subject to tax. These contributions can be claimed as a business expense on their tax filings.
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