Employer Comparable Contributions to Health Savings Accounts Under Section 4980G, and Requirement of Return for Filing of the Excise Tax Under Section 4980B, 4980D, 4980E or 4980G, 45994-46000 [E9-21225]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 74, Number 172 (Tuesday, September 8, 2009)]
[Rules and Regulations]
[Pages 45994-46000]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-21225]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 54

[TD 9457]
RIN 1545-BG71


Employer Comparable Contributions to Health Savings Accounts 
Under Section 4980G, and Requirement of Return for Filing of the Excise 
Tax Under Section 4980B, 4980D, 4980E or 4980G

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations providing guidance on 
employer comparable contributions to Health Savings Accounts (HSAs) 
under section 4980G of the Internal Revenue Code (Code) as amended by 
sections 302, 305 and 306 of the Tax Relief and Health Care Act of 2006 
(the Act). The final regulations also provide guidance relating to the 
manner and method of reporting and paying the excise tax under sections 
4980B, 4980D, 4980E, and 4980G of the Code. These final regulations 
would affect employers that contribute to employees' HSAs and Archer 
MSAs, employers or employee organizations that sponsor a group health 
plan, and certain third parties such as insurance companies or HMOs or 
third-party administrators who are responsible for providing benefits 
under the plan.

DATES: Effective date. These regulations are effective on September 8, 
2009.
    Applicability date. The sections of these regulations that provide 
guidance on employer comparable contributions to HSAs under section 
4980G apply to employer contributions made on or after January 1, 2010. 
The sections of these regulations that provide guidance relating to the 
excise tax under sections 4980B, 4980D, 4980E and 4980G apply to any 
Form 8928 that is due on or after January 1, 2010.

FOR FURTHER INFORMATION CONTACT: Concerning the final regulations as 
they relate to sections 4980E or 4980G, Mireille Khoury at (202) 622-
6080; and concerning the final regulations as they relate to section 
4980B or 4980D, Russ Weinheimer at (202) 622-6080 (not toll-free 
numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collection of information contained in these regulations has 
been reviewed and approved by the Office of

[[Page 45995]]

Management and Budget in accordance with the Paperwork Reduction Act of 
1995 (44 U.S.C. 3507(d)), under control number 1545-2146. The 
collection of information in these final regulations is in Sec.  
54.6011-2. The collection of information results from the requirement 
to file a return for the payment of the excise tax under section 4980B, 
4980D, 4980E, or 4980G of the Code. The likely respondents are 
employers that contribute to employees' HSAs and Archer MSAs, employers 
or employee organizations that sponsor a group health plan, and certain 
third parties such as insurance companies or HMOs or third-party 
administrators who are responsible for providing benefits under the 
plan.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by the Office of Management and Budget. Books 
or records relating to a collection of information must be retained as 
long as their contents might become material in the administration of 
any internal revenue law. Generally, tax returns and tax return 
information are confidential, as required by 26 U.S.C. 6103.

Background

    This document contains final amendments to the Excise Tax 
Regulations (26 CFR part 54) under section 4980G of the Code, as 
amended by Sections 302 and 305 of the Tax Relief and Health Care Act 
of 2006 (the Act), Public Law 109-432, under paragraph (d) of section 
4980G of the Code, as enacted by section 306 of the Act, and under 
Section 4980E of the Code.
    Under section 4980G, an excise tax is imposed on an employer that 
fails to make comparable contributions to the HSAs of its employees. On 
July 31, 2006, final regulations on comparability were published in the 
Federal Register, 72 FR 30501 (2007-26 IRB 1495), TD 9277. In addition, 
on April 17, 2008, final regulations were published in the Federal 
Register, 73 FR 20794 (2008-20 IRB 975), TD 9393, providing guidance on 
employer comparable contributions to HSAs in instances where an 
employee has not established an HSA by December 31st and in instances 
where an employer accelerates contributions for the calendar year for 
employees who have incurred qualified medical expenses. See Sec.  
601.601(d)(2).
    This document also contains final amendments to the Excise Tax 
Regulations (26 CFR part 54) under sections 4980B and 4980D. Under 
section 4980B, group health plans maintained by an employer with 20 or 
more employees must comply with continuation coverage requirements. If 
a plan does not satisfy these requirements, an excise tax is imposed of 
$100 per day per affected beneficiary. Final regulations under section 
4980B have been published, including provisions concerning the excise 
tax, but no return filing requirement has previously been imposed. See 
Sec.  54.4980B-2, Q&A-9 and Q&A-10. Moreover, under chapter 100 of the 
Code, group health plans must comply with various requirements, 
including limitations on preexisting condition exclusions, 
certification of creditable coverage, special enrollments, prohibitions 
against discrimination based on a health factor (including genetic 
information), parity between mental health benefits and medical/
surgical benefits, minimum hospital lengths of stay in connection with 
childbirth, and continued coverage for post-secondary students with a 
serious medical condition. If a plan does not satisfy any of these 
requirements under chapter 100, section 4980D imposes an excise tax of 
$100 per day per affected individual. Regulations interpreting the 
substantive requirements of chapter 100 have previously been published, 
but no regulations have been published concerning the excise tax under 
section 4980D.
    On July 16, 2008, proposed regulations (REG-120476-07) were 
published in the Federal Register (73 FR 40793) addressing comparable 
contributions to nonhighly compensated employees. The proposed 
regulations also provided guidance for employers that offer qualified 
HSA distributions and for employers that make the maximum annual HSA 
contribution on behalf of all employees who are eligible individuals on 
the first day of the last month of the employees' taxable year. 
Finally, the proposed regulations provided guidance on the requirement 
of a return to accompany payment of the excise taxes under sections 
4980B, 4980D, 4980E, and 4980G and the time for filing that return. 
These final regulations adopt the provisions of the proposed 
regulations without substantive revision. The final regulations make 
certain minor clarifying changes to the rules of the proposed 
regulations.

Explanation of Provisions and Summary of Comments

Special Rule for Contributions to Nonhighly Compensated Employees

    Paragraph (d) of section 4980G provides an exception to the 
comparability rules that allows, but does not require, employers to 
make larger contributions to the HSAs of nonhighly compensated 
employees than the employer makes to the HSAs of highly compensated 
employees. The final regulations address this exception to 
comparability in Sec.  54.4980G-4 and provide that employer 
contributions to the HSAs of nonhighly compensated employees may be 
larger than employer contributions to the HSAs of highly compensated 
employees with comparable coverage during a period. Conversely, 
employer contributions to the HSAs of highly compensated employees may 
not exceed employer contributions to the HSAs of nonhighly compensated 
employees with comparable coverage during a period.
    The comparability rules still apply with respect to contributions 
to the HSAs of all nonhighly compensated employees who are comparable 
participating employees (eligible individuals who are in the same 
category of employees with the same category of high deductible health 
plan (HDHP) coverage) and an employer must make comparable 
contributions to the HSA of each nonhighly compensated employee who is 
a comparable participating employee during the calendar year. 
Similarly, the comparability rules still apply with respect to 
contributions to the HSAs of all highly compensated employees who are 
comparable participating employees and an employer must make comparable 
contributions to the HSA of each highly compensated employee who is a 
comparable participating employee during the calendar year. 
Collectively bargained employees are disregarded for purposes of 
section 4980G, as are HSA contributions made through a cafeteria plan.
    For purposes of section 4980G(d), highly compensated employee is 
defined under section 414(q) and includes any employee who was (1) a 
five-percent owner at any time during the year or the preceding year; 
or (2) for the preceding year, (A) had compensation from the employer 
in excess of $110,000 (for 2009, indexed for inflation) and (B) if 
elected by the employer, was in the group consisting of the top 20 
percent of employees when ranked based on compensation. Nonhighly 
compensated employees are employees that are not highly compensated 
employees.

Maximum HSA Contribution Permitted for Employees Who Become Eligible 
Individuals Mid-Year

    Section 305 of the Act provides that individuals who are eligible 
individuals

[[Page 45996]]

on the first day of the last month of the employees' taxable year 
(December 1 for calendar year taxpayers) may make or have made on their 
behalf the maximum annual HSA contribution based on their HDHP coverage 
(self only or family) on that date. A portion of the contribution is 
included in income and subject to an additional 10 percent tax if the 
individual fails to remain an eligible individual for 12 months after 
the last month of the taxable year. See section 223(b)(8). Section 
54.4980G-6 of the final regulations provides that the employer can 
contribute up to this maximum contribution on behalf of all employees 
who are eligible individuals on the first day of the last month of the 
employees' taxable year (December 1 for calendar year taxpayers), 
including employees who became eligible individuals after January 1st 
of the calendar year and eligible individuals who were hired after 
January 1st of the calendar year (both such classes of individuals are 
hereinafter referred to as ``mid-year eligible individuals''). An 
employer who makes the maximum calendar year HSA contribution, or who 
contributes more than a pro-rata amount, on behalf of employees who are 
mid-year eligible individuals will not fail to satisfy comparability 
merely because some employees will have received more contributions on 
a monthly basis than employees who worked the entire calendar year.
    Employers are not required to make these greater than pro-rata 
contributions and may instead pro-rate contributions based on the 
number of months that an individual was both employed by the employer 
and an eligible individual. However, if an employer contributes more 
than the monthly pro-rata amount for the calendar year to the HSA of 
any employee who is a mid-year eligible individual, the employer must 
then contribute, on an equal and uniform basis, a greater than pro-rata 
amount to the HSAs of all comparable participating employees who are 
mid-year eligible individuals. Likewise, if the employer contributes 
the maximum annual contribution amount for the calendar year to the HSA 
of any employee who is a mid-year eligible individual, the employer 
must contribute that same amount to the HSAs of all comparable 
participating employees who are mid-year eligible individuals.

Special Comparability Rules for Qualified HSA Distributions

    Section 302(a) of the Act provides for qualified HSA distributions. 
See section 106(e) and Notice 2007-22 (2007-10 IRB 670). See Sec.  
601.601(d)(2). A qualified HSA distribution is a direct distribution of 
an amount from a health flexible spending arrangement (health FSA) or a 
health reimbursement arrangement (HRA) to an HSA. The distribution must 
not exceed the lesser of the balance in the health FSA or HRA on 
September 21, 2006, or as of the date of the distribution. Section 
54.4980G-7 of the final regulations provides that if an employer offers 
qualified HSA distributions to any employee who is an eligible 
individual covered under any HDHP, the employer must offer qualified 
HSA distributions to all employees who are eligible individuals covered 
under any HDHP. However, an employer that offers qualified HSA 
distributions only to employees who are eligible individuals covered 
under the employer's HDHP is not required to offer qualified HSA 
distributions to employees who are eligible individuals but are not 
covered under the employer's HDHP.

Reporting and Payment of the Excise Tax Under Section 4980B, 4980D, 
4980E or 4980G

    The regulations prescribe the manner and method of paying the 
excise taxes imposed under section 4980B, 4980D, 4980E, or 4980G. The 
final regulations, like the proposed regulations, provide that these 
excise taxes must be reported on Form 8928, ``Return of Certain Excise 
Taxes Under Chapter 43 of the Internal Revenue Code.'' The excise tax 
under section 4980B, 4980D, 4980E or 4980G must be paid at the time 
prescribed for filing of the excise tax return (without extensions). 
With respect to the excise tax under section 4980B or 4980D for 
employers and third parties such as insurers or third party 
administrators, the return is due on or before the due date for filing 
the person's Federal income tax return. An extension to file the 
person's income tax return does not extend the date for filing Form 
8928. With respect to the excise tax under section 4980B or 4980D for 
multiemployer or specified multiple employer health plans, the return 
is due on or before the last day of the seventh month after the end of 
the plan year. Finally, with respect to the excise tax under section 
4980E or 4980G for noncomparable contributions, the return is due on or 
before the 15th day of the fourth month following the calendar year in 
which the noncomparable contributions were made. The final regulations 
also provide guidance regarding the place for filing these excise tax 
returns, the signing of these excise returns, and the time and place 
for paying the tax shown on such returns.
    Two comments were received regarding the reporting and filing of 
the excise taxes under sections 4980B, 4980D, 4980E, and 4980G. One 
commentator was concerned that the noncompliance period under section 
4980B or 4980D could extend beyond the due date for filing the excise 
tax return and suggested that the due date be extended to 90 days after 
the end of the noncompliance period. It is true that the noncompliance 
period under section 4980B, for example, could extend over four or more 
taxable years of the person responsible for payment of the tax. 
Therefore, extending the due date until 90 days after the end of the 
noncompliance period would in some cases defer the obligation to pay 
the excise tax for over four years, which would not be in the interest 
of sound tax administration. As such, the final regulations do not 
adopt this change.
    Another commentator noted that the excise tax might be due before 
the person responsible for paying it had even discovered that a failure 
under section 4980B or 4980D had occurred. However, this concern is 
mitigated by the fact that sections 4980B and 4980D provide that the 
excise tax does not apply for any period for which the responsible 
party did not know, or exercising reasonable diligence would not have 
known, that the failure existed. Also, under sections 4980B and 4980D, 
the excise tax does not apply if the failure is corrected (that is, the 
failure is retroactively undone to the extent possible and the affected 
beneficiary is placed in a financial position as good as the 
beneficiary would have been had the failure not occurred).
    Finally, a commentator also stated that there are some 
uncertainties about the application of the excise tax rules to various 
situations that could arise under section 4980B. The commentator 
suggested that the filing and payment requirement for the excise tax 
under section 4980B should not apply until additional guidance was 
issued that addressed these uncertainties. The Treasury Department and 
the IRS believe that the statutory and regulatory provisions in this 
area provide appropriate guidance. Therefore, the final regulations do 
not adopt this comment.
    The guidance in the proposed regulations relating to the excise 
taxes imposed under section 4980B, 4980D, 4980E, or 4980G was contained 
in Q & A-11 in Sec.  4980B-2, Q & A-1 in Sec.  4980D-1, Q & A-1 in 
Sec.  4980E-1, and Q & A-5 in Sec.  4980G-1. The final regulations 
provide additional clarifying information relating to the guidance 
previously provided in these Q &As,

[[Page 45997]]

and the final regulations also consolidate this guidance by including 
it under the following sections: Sec. Sec.  54.6011-2, 54.6061-1, 
54.6071-1, 54.6091-1 and 54.6151-1.

Effective/Applicability Date

    The sections of these regulations that provide guidance on employer 
comparable contributions to HSAs under section 4980G apply to employer 
contributions made on or after January 1, 2010.
    The sections of these regulations that provide guidance relating to 
the excise tax under sections 4980B, 4980D, 4980E and 4980G apply to 
any Form 8928 that is due on or after January 1, 2010.

Special Analyses

    It has been determined that this Treasury Decision is not a 
significant regulatory action as defined in Executive Order 12866. 
Therefore, a regulatory assessment is not required. It also has been 
determined that section 553(b) of the Administrative Procedure Act (5 
U.S.C. chapter 5) does not apply to these regulations. It is hereby 
certified that the collection of information in these regulations will 
not have a significant economic impact on a substantial number of small 
entities. Therefore, a Regulatory Flexibility Analysis under the 
Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. 
Pursuant to section 7805(f) of the Code, the notice of proposed 
rulemaking preceding this regulation was submitted to the Chief Counsel 
for Advocacy of the Small Business Administration for comment on its 
impact on small business.

Drafting Information

    The principal authors of these final regulations are Mireille 
Khoury and Russ Weinheimer, Office of Division Counsel/Associate Chief 
Counsel (Tax Exempt and Government Entities), Internal Revenue Service. 
However, personnel from other offices of the IRS and Treasury 
Department participated in their development.

List of Subjects in 26 CFR Part 54

    Excise taxes, Pensions, Reporting and recordkeeping requirements.

Adoption of Amendment to the Regulations

0
Accordingly, 26 CFR part 54 is amended as follows:

PART 54--PENSION EXCISE TAXES

0
Paragraph 1. The authority citation for part 54 is amended by adding 
entries in numerical order to read in part as follows:

    Authority: 26 U.S.C. 7805 * * *
    Section 54.4980G-6 also issued under 26 U.S.C. 4980G.
    Section 54.4980G-7 also issued under 26 U.S.C. 4980G. * * *


0
Par. 2. Section 54.4980B-0 is amended by adding a new Q-11 to Sec.  
54.4980B-2 in the list of questions to read as follows:


Sec.  54.4980B-0  Table of contents.

* * * * *

List of Questions

* * * * *


Sec.  54.4980B-2  Plans that must comply.

* * * * *
    Q-11: If a person is liable for the excise tax under section 4980B, 
what form must the person file and what is the due date for the filing 
and payment of the excise tax?
* * * * *


0
Par. 3. Section 54.4980B-2 is amended by adding a new Q&A-11 to read as 
follows:


Sec.  54.4980B-2  Plans that must comply.

* * * * *
    Q-11: If a person is liable for the excise tax under section 4980B, 
what form must the person file and what is the due date for the filing 
and payment of the excise tax?
    A-11: (a) In general. See Sec. Sec.  54.6011-2 and 54.6151-1.
    (b) Due date for filing of return by employers or other persons 
responsible for benefits under a group health plan. See Sec.  54.6071-
1(a)(1).
    (c) Due date for filing of return by multiemployer plans. See Sec.  
54.6071-1(a)(2).
    (d) Effective/applicability date. In the case of an employer or 
other person mentioned in paragraph (b) of this Q & A-11, the rules in 
this Q & A-11 are effective for taxable years beginning on or after 
January 1, 2010. In the case of a plan mentioned in paragraph (c) of 
this Q & A-11, the rules in this Q & A-11 are effective for plan years 
beginning on or after January 1, 2010.

0
Par. 4. Section 54.4980D-1 is added to read as follows:


Sec.  54.4980D-1  Requirement of return and time for filing of the 
excise tax under section 4980D.

    Q-1: If a person is liable for the excise tax under section 4980D, 
what form must the person file and what is the due date for the filing 
and payment of the excise tax?
    A-1: (a) In general. See Sec. Sec.  54.6011-2 and 54.6151-1.
    (b) Due date for filing of return by employers. See Sec.  54.6071-
1(b)(1).
    (c) Due date for filing of return by multiemployer plans or 
multiple employer health plans. See Sec.  54.6071-1(b)(2).
    (d) Effective/applicability date. In the case of an employer or 
other person mentioned in paragraph (b) of this Q & A-1, the rules in 
this Q & A-1 are effective for taxable years beginning on or after 
January 1, 2010. In the case of a plan mentioned in paragraph (c) of 
this Q & A-1, the rules in this Q & A-1 are effective for plan years 
beginning on or after January 1, 2010.

0
Par. 5. Section 54.4980E-1 is added to read as follows:


Sec.  54.4980E-1  Requirement of return and time for filing of the 
excise tax under section 4980E.

    Q-1: If a person is liable for the excise tax under section 4980E, 
what form must the person file and what is the due date for the filing 
and payment of the excise tax?
    A-1: (a) In general. See Sec. Sec.  54.6011-2, 54.6151-1 and 
54.6071-1(c).
    (b) Effective/applicability date. The rules in this Q & A-1 are 
effective for plan years beginning on or after January 1, 2010.

0
Par. 6. Section 54.4980G-1 is amended by:
0
1. Revising the last sentence in A-1 and adding a new sentence at the 
end of paragraph (a) in A-2.
0
2. Adding a new Q & A-5.
    The revisions and addition read as follows:


Sec.  54.4980G-1  Failure of employer to make comparable health savings 
account contributions.

* * * * *
    A-1: * * * But see Q & A-6 in Sec.  54.4980G-3 for treatment of 
collectively bargained employees and Q & A-1 in Sec.  54.4980G-6 for 
the rules allowing larger comparable contributions to nonhighly 
compensated employees.
* * * * *
    A-2: (a) * * * See also Sec.  54.4980G-6 for the rules allowing 
larger comparable contributions to nonhighly compensated employees.
* * * * *
    Q-5: If a person is liable for the excise tax under section 4980G, 
what form must the person file and what is the due date for the filing 
and payment of the excise tax?
    A-5: (a) In general. Sec. Sec.  54.6011-2, 54.6151-1 and 54.6071-
1(d).
    (b) Effective/applicability date. The rules in this Q & A-5 are 
effective for employer contributions made for calendar years beginning 
on or after January 1, 2010.

[[Page 45998]]


0
Par. 7. Section 54.4980G-3 is amended by:
0
1. Revising the section heading.
0
2. Revising the introductory text in paragraph (a) of A-5.
0
3. Adding a new sentence at the end of paragraph (c) of A-5 and 
paragraph (a) of A-9.
    The revision and additions read as follows:


Sec.  54.4980G-3  Failure of employer to make comparable health savings 
account contributions.

* * * * *
    A-5: (a) Categories. The categories of employees for comparability 
testing are as follows (but see Q & A-6 of this section for the 
treatment of collectively bargained employees and Q & A-1 of Sec.  
54.4980G-6 for a special rule for contributions made to the HSAs of 
nonhighly compensated employees)--
* * * * *
    (c) * * * But see Sec.  54.4980G-6 for a special rule for 
contributions made to the HSAs of nonhighly compensated employees.
* * * * *
    A-9: (a) * * * See Sec.  54.4980G-6 for a special rule for 
contributions made to the HSAs of nonhighly compensated employees.
* * * * *

0
Par. 8. Section 54.4980G-4 is amended by:
0
1. Adding a new sentence at the end of paragraph (a) of A-1.
0
2. Adding paragraphs (h), (i) and (j) to A-2.
    The additions read as follows:


Sec.  54.4980G-4  Calculating comparable contributions.

* * * * *
    A-1: (a) * * * But see Q & A-1 of Sec.  54.4980G-6 for a special 
rule for contributions made to the HSAs of nonhighly compensated 
employees.
* * * * *
    A-2: * * *
* * * * *
    (h) Maximum contribution permitted for all employees who are 
eligible individuals during the last month of the taxable year. An 
employer may contribute up to the maximum annual contribution amount 
for the calendar year (based on the employees' HDHP coverage) to the 
HSAs of all employees who are eligible individuals on the first day of 
the last month of the employees' taxable year, including employees who 
worked for the employer for less than the entire calendar year and 
employees who became eligible individuals after January 1st of the 
calendar year. For example, such contribution may be made on behalf of 
an eligible individual who is hired after January 1st or an employee 
who becomes an eligible individual after January 1st. Employers are not 
required to provide more than a pro-rata contribution based on the 
number of months that an individual was an eligible individual and 
employed by the employer during the year. However, if an employer 
contributes more than a pro-rata amount for the calendar year to the 
HSA of any eligible individual who is hired after January 1st of the 
calendar year or any employee who becomes an eligible individual any 
time after January 1st of the calendar year, the employer must 
contribute that same amount on an equal and uniform basis to the HSAs 
of all comparable participating employees (as defined in Q & A-1 in 
Sec.  54.4980G-1) who are hired or become eligible individuals after 
January 1st of the calendar year. Likewise, if an employer contributes 
the maximum annual contribution amount for the calendar year to the HSA 
of any eligible individual who is hired after January 1st of the 
calendar year or any employee who becomes an eligible individual any 
time after January 1st of the calendar year, the employer must 
contribute the maximum annual contribution amount on an equal and 
uniform basis to the HSAs of all comparable participating employees (as 
defined in Q & A-1 in Sec.  54.4980G-1) who are hired or become 
eligible individuals after January 1st of the calendar year. An 
employer who makes the maximum calendar year contribution or more than 
a pro-rata contribution to the HSAs of employees who become eligible 
individuals after the first day of the calendar year or eligible 
individuals who are hired after the first day of the calendar year will 
not fail to satisfy comparability merely because some employees will 
have received more contributions on a monthly basis than employees who 
worked the entire calendar year.
    (i) Examples. The following examples illustrate the rules in 
paragraph (h) in this Q & A-2. In the following examples, no 
contributions are made through a section 125 cafeteria plan and none of 
the employees are covered by a collective bargaining agreement.

    Example 1. On January 1, 2010, Employer Q contributes $1,000 for 
the calendar year to the HSAs of employees who are eligible 
individuals with family HDHP coverage. In mid-March of the same 
year, Employer Q hires Employee A, an eligible individual with 
family HDHP coverage. On April 1, 2010, Employer Q contributes 
$1,000 to the HSA of Employee A. In September of the same year, 
Employee B becomes an eligible individual with family HDHP coverage. 
On October 1, 2010, Employer G contributes $1,000 to the HSA of 
Employee B. Employer Q does not make any other contributions for the 
2010 calendar year. Employer Q's contributions satisfy the 
comparability rules.
    Example 2. For the 2010 calendar year, Employer R only has two 
employees, Employee C and Employee D. Employee C, an eligible 
individual with family HDHP coverage, works for Employer R for the 
entire calendar year. Employee D, an eligible individual with family 
HDHP coverage works for Employer R from July 1st through December 
31st. Employer R contributes $1,200 for the calendar year to the HSA 
of Employee C and $600 to the HSA of Employee D. Employer R does not 
make any other contributions for the 2010 calendar year. Employer 
R's contributions satisfy the comparability rules.

    (j) Effective/applicability date. The rules in paragraphs (h) and 
(i) of Q & A-2 are effective for employer contributions made for 
calendar years beginning on or after January 1, 2010.
* * * * *

0
Par. 9. Section 54.4980G-6 is added to read as follows:


Sec.  54.4980G-6  Special rule for contributions made to the HSAs of 
nonhighly compensated employees.

    Q-1: May an employer make larger contributions to the HSAs of 
nonhighly compensated employees than to the HSAs of highly compensated 
employees?
    A-1: Yes. Employers may make larger HSA contributions for nonhighly 
compensated employees who are comparable participating employees than 
for highly compensated employees who are comparable participating 
employees. See Q & A-1 in Sec.  54.4980G-1 for the definition of 
comparable participating employee. For purposes of this section, highly 
compensated employee is defined under section 414(q). Nonhighly 
compensated employees are employees that are not highly compensated 
employees. The comparability rules continue to apply with respect to 
contributions to the HSAs of all nonhighly compensated employees. 
Employers must make comparable contributions for the calendar year to 
the HSA of each nonhighly compensated employee who is a comparable 
participating employee.
    Q-2: May an employer make larger contributions to the HSAs of 
highly compensated employees than to the HSAs of nonhighly compensated 
employees?
    A-2: (a) In general. No. Employer contributions to HSAs for highly 
compensated employees who are comparable participating employees may 
not be larger than employer HSA contributions for nonhighly

[[Page 45999]]

compensated employees who are comparable participating employees. The 
comparability rules continue to apply with respect to contributions to 
the HSAs of all highly compensated employees. Employers must make 
comparable contributions for the calendar year to the HSA of each 
highly compensated comparable participating employee. See Q & A-1 in 
Sec.  54.4980G-1 for the definition of comparable participating 
employee.
    (b) Examples. The following examples illustrate the rules in Q & A-
1 and Q & A-2 of this section. No contributions are made through a 
section 125 cafeteria plan and none of the employees in the following 
examples are covered by a collective bargaining agreement. All of the 
employees in the following examples have the same HDHP deductible for 
the same category of coverage.

    Example 1. In 2010, Employer A contributes $1,000 for the 
calendar year to the HSA of each full-time nonhighly compensated 
employee who is an eligible individual with self-only HDHP coverage. 
Employer A makes no contribution to the HSA of any full-time highly 
compensated employee who is an eligible individual with self-only 
HDHP coverage. Employer A's HSA contributions for calendar year 2010 
satisfy the comparability rules.
    Example 2. In 2010, Employer B contributes $2,000 for the 
calendar year to the HSA of each full-time nonhighly compensated 
employee who is an eligible individual with self-only HDHP coverage. 
Employer B also contributes $1,000 for the calendar year to the HSA 
of each full-time highly compensated employee who is an eligible 
individual with self-only HDHP coverage. Employer B's HSA 
contributions for calendar year 2010 satisfy the comparability 
rules.
    Example 3. In 2010, Employer C contributes $1,000 for the 
calendar year to the HSA of each full-time nonhighly compensated 
employee who is an eligible individual with self-only HDHP coverage. 
Employer C contributes $2,000 for the calendar year to the HSA of 
each full-time highly compensated employee who is an eligible 
individual with self-only HDHP coverage. Employer C's HSA 
contributions for calendar year 2010 do not satisfy the 
comparability rules.
    Example 4. In 2010, Employer D contributes $1,000 for the 
calendar year to the HSA of each full-time nonhighly compensated 
employee who is an eligible individual with self-only HDHP coverage. 
Employer D also contributes $1,000 to the HSA of each full-time 
highly compensated employee who is an eligible individual with self-
only HDHP coverage. In addition, the employer contributes an 
additional $500 to the HSA of each nonhighly compensated employee 
who participates in a wellness program. The nonhighly compensated 
employees did not receive comparable contributions, and, therefore, 
Employer D's HSA contributions for calendar year 2010 do not satisfy 
the comparability rules.
    Example 5. In 2010, Employer E contributes $1,000 for the 
calendar year to the HSA of each full-time non-management nonhighly 
compensated employee who is an eligible individual with family HDHP 
coverage. Employer E also contributes $500 for the calendar year to 
the HSA of each full-time management nonhighly compensated employee 
who is an eligible individual with family HDHP coverage. The 
nonhighly compensated employees did not receive comparable 
contributions, and, therefore, Employer E's HSA contributions for 
calendar year 2010 do not satisfy the comparability rules.

    Q-3: May an employer make larger HSA contributions for employees 
with self plus two HDHP coverage than employees with self plus one HDHP 
coverage even if the employees with self plus two are all highly 
compensated employees and the employees with self plus one are all 
nonhighly compensated employees?
    A-3: (a) Yes. Q & A-1 in Sec.  54.4980G-4 provides that an 
employer's contribution with respect to the self plus two category of 
HDHP coverage may not be less than the contribution with respect to the 
self plus one category and the contribution with respect to the self 
plus three or more category may not be less than the contribution with 
respect to the self plus two category. Therefore, the comparability 
rules are not violated if an employer makes a larger HSA contribution 
for the self plus two category of HDHP coverage than to self plus one 
coverage, even if the employees with self plus two coverage are all 
highly compensated employees and the employees with self plus one 
coverage are all nonhighly compensated employees. Likewise, the 
comparability rules are not violated if an employer makes a larger HSA 
contribution for the self plus three category of HDHP coverage than to 
self plus two coverage, even if the employees with self plus three 
coverage are all highly compensated employees and the employees with 
self plus two coverage are all nonhighly compensated employees.
    (b) Example. The following example illustrates the rules in 
paragraph (a) of this Q & A-3. In the following example, no 
contributions are made through a section 125 cafeteria plan and none of 
the employees are covered by a collective bargaining agreement.

    Example. In 2010, Employer F contributes $1,000 for the calendar 
year to the HSA of each full-time employee who is an eligible 
individual with self plus one HDHP coverage. Employer F contributes 
$1,500 for the calendar year to the HSA of each employee who is an 
eligible individual with self plus two HDHP coverage. The deductible 
for both the self plus one HDHP and the self plus two HDHP is 
$2,000. Employee A, an eligible individual, is a nonhighly 
compensated employee with self plus one coverage. Employee B, an 
eligible individual, is a highly compensated employee with self plus 
two coverage. For the 2010 calendar year, Employer F contributes 
$1,000 to Employee A's HSA and $1,500 to Employee B's HSA. Employer 
F's HSA contributions satisfy the comparability rules.

    Q-4: What is the effective date for the rules in this section?
    A-4: The rules in this section are effective for employer 
contributions made for calendar years beginning on or after January 1, 
2010.

0
Par. 10. Section 54.4980G-7 is added to read as follows:


Sec.  54.4980G-7  Special comparability rules for qualified HSA 
distributions contributed to HSAs on or after December 20, 2006 and 
before January 1, 2012.

    Q-1: How do the comparability rules of section 4980G apply to 
qualified HSA distributions under section 106(e)(2)?
    A-1: The comparability rules of section 4980G do not apply to 
amounts contributed to employee HSAs through qualified HSA 
distributions. However, in order to satisfy the comparability rules, if 
an employer offers qualified HSA distributions, as defined in section 
106(e)(2), to any employee who is an eligible individual covered under 
any HDHP, the employer must offer qualified HSA distributions to all 
employees who are eligible individuals covered under any HDHP. However, 
if an employer offers qualified HSA distributions only to employees who 
are eligible individuals covered under the employer's HDHP, the 
employer is not required to offer qualified HSA distributions to 
employees who are eligible individuals but are not covered under the 
employer's HDHP.
    Q-2: What is the effective date for the rules in this section?
    A-2: The rules in this section are effective for are effective for 
employer contributions made for calendar years beginning on or after 
January 1, 2010.

0
Par. 11. Section 54.6011-2 is added to read as follows:


Sec.  54.6011-2  General requirement of return, statement, or list.

    Effective for any Form 8928 that is due on or after January 1, 
2010, any person liable for tax under section 4980B, 4980D, 4980E, or 
4980G of the Code shall file a return with respect to the tax on Form 
8928. The return must include the information required by Form 8928 and 
the instructions issued with respect to it.

[[Page 46000]]


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Par. 12. Section 54.6061-1 is added to read as follows:


Sec.  54.6061-1  Signing of returns and other documents.

    Effective for any Form 8928 that is due on or after January 1, 
2010, any return, statement, or other document required to be made with 
respect to a tax imposed by section 4980B, 4980D, 4980E, or 4980G of 
the Code or the regulations under section 4980B, 4980D, 4980E, or 4980G 
must be signed by the person required to file the return, statement, or 
other document, or by the persons required or duly authorized to sign 
in accordance with the regulations, forms, or instructions prescribed 
with respect to such return, statement, or document. An individual's 
signature on such return, statement, or other document shall be prima 
facie evidence that the individual is authorized to sign the return, 
statement, or other document.

0
Par. 13. Section 54.6071-1 is added to read as follows:


Sec.  54.6071-1  Time for filing returns.

    (a) Returns under section 4980B. (1) Due date for filing of return 
by employers or other persons responsible for benefits under a group 
health plan. If the person liable for the excise tax is an employer or 
other person responsible for providing or administering benefits under 
a group health plan (such as an insurer or a third party 
administrator), the return required by Sec.  54.6011-2 must be filed on 
or before the due date for filing the person's income tax return and 
must reflect the portion of the noncompliance period for each failure 
under section 4980B that falls during the person's taxable year. An 
extension to file the person's income tax return does not extend the 
date for filing Form 8928.
    (2) Due date for filing of return by multiemployer plans. If the 
person liable for the excise tax is a multiemployer plan, the return 
required by Sec.  54.6011-2 must be filed on or before the last day of 
the seventh month following the end of the plan's plan year. The filing 
of Form 8928 by a plan must reflect the portion of the noncompliance 
period for each failure under section 4980B that falls during the 
plan's plan year.
    (b) Returns under section 4980D. (1) Due date for filing of return 
by employers. If the person liable for the excise tax is an employer, 
the return required by Sec.  54.6011-2 must be filed on or before the 
due date for filing the employer's income tax return and must reflect 
the portion of the noncompliance period for each failure under chapter 
100 that falls during the employer's taxable year. An extension to file 
the employer's income tax return does not extend the date for filing 
Form 8928.
    (2) Due date for filing of return by multiemployer plans or 
multiple employer health plans. If the person liable for the excise tax 
is a multiemployer plan or a specified multiple employer health plan, 
the return required by Sec.  54.6011-2 must be filed on or before the 
last day of the seventh month following the end of the plan's plan 
year. The filing of Form 8928 by a plan must reflect the portion of the 
noncompliance period for each failure under chapter 100 that falls 
during the plan's plan year.
    (c) Returns under section 4980E. Any employer who is liable for the 
excise tax under section 4980E must report this tax by filing the 
return required by Sec.  54.6011-2 on or before the 15th day of the 
fourth month following the calendar year in which the noncomparable 
contributions were made.
    (d) Returns under section 4980G. Any employer who is liable for the 
excise tax under section 4980E must report this tax by filing the 
return required by Sec.  54.6011-2 on or before the 15th day of the 
fourth month following the calendar year in which the noncomparable 
contributions were made. See Q & A-4 of Sec.  54.4980G-1 for the rules 
on computation of the excise tax under section 4980G.
    (e) Effective/applicability date: The rules in this section are 
effective for any Form 8928 that is due on or after January 1, 2010.

0
Par. 14. Section 54.6091-1 is added to read as follows:


Sec.  54.6091-1  Place for filing excise tax returns under section 
4980B, 4980D, 4980E, or 4980G.

    Effective for any Form 8928 that is due on or after January 1, 
2010, the return required by Sec.  54.6011-2 must be filed at the place 
specified in the forms and instructions provided by the Internal 
Revenue Service.

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Par. 15. Section 54.6151-1 is added to read as follows:


Sec.  54.6151-1  Time and place for paying of tax shown on returns.

    Effective for any Form 8928 that is due on or after January 1, 
2010, the tax shown on any return which is imposed under section 4980B, 
4980D, 4980E or 4980G shall, without assessment or notice and demand, 
be paid to the internal revenue officer with whom the return is filed 
at the time and place for filing such return (determined without regard 
to any extension of time for filing the return). For provisions 
relating to the time and place for filing such return, see Sec. Sec.  
54.6071-1 and 54.6091-1.

Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
    Approved: August 20, 2009.
Michael Mundaca,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. E9-21225 Filed 9-4-09; 8:45 am]
BILLING CODE 4830-01-P