Is this okay to do with an HSA?

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2retire
Posts: 367
Joined: Wed Jun 13, 2012 9:00 am

Is this okay to do with an HSA?

Post by 2retire » Wed Jan 06, 2016 2:46 pm

My company is willing to deduct my HSA contribution from my paycheck and send it to my HSA Bank. However, they can't fulfill all the requirements of the HSA bank for the ACH deposit.

I have a normal checking account at another bank. Is there any problem with me having my company deposit the money into my regular checking account, then set up an ACH pull at the HSA bank to pull the money into my HSA account?

jebmke
Posts: 8033
Joined: Thu Apr 05, 2007 2:44 pm

Re: Is this okay to do with an HSA?

Post by jebmke » Wed Jan 06, 2016 3:19 pm

I'm guessing that if they send you the money directly it will not appear as an HSA deduction on your W2 and you will have to do it on your tax return. You lose shelter from payroll taxes that way. If it is sent to you, they have no way to know where the money ends up -- it is like a normal take-home paycheck.
When you discover that you are riding a dead horse, the best strategy is to dismount.

2retire
Posts: 367
Joined: Wed Jun 13, 2012 9:00 am

Re: Is this okay to do with an HSA?

Post by 2retire » Wed Jan 06, 2016 3:44 pm

I should clarify. My company has an HSA specific direct deposit form that I fill out. They can direct my HSA money to a different place than my pay check. As far as I understand, they would take the amount I specified out of my paycheck, pre-tax, and deposit it into the account I tell them to.

I was wondering if there is something special about an HSA bank accounts. For example, does it have to be registered with the government as such. If the IRS saw my HSA money going into a regular old checking account, would that cause red flags. As soon as it hits my checking account, I plan to immediately transfer it to my HSA Bank.

niceguy7376
Posts: 2012
Joined: Wed Jul 10, 2013 2:59 pm
Location: Metro ATL

Re: Is this okay to do with an HSA?

Post by niceguy7376 » Wed Jan 06, 2016 4:13 pm

Just like the 401k contributions of yours are directly placed in your 401k account, the HSA contributions are to be deposited in the specific HSA account to be accounted as such.
2retire wrote:My company is willing to deduct my HSA contribution from my paycheck and send it to my HSA Bank. However, they can't fulfill all the requirements of the HSA bank for the ACH deposit.
Why is your employer unable to deposit the contribution into the HSA account that your company has set up?

jebmke
Posts: 8033
Joined: Thu Apr 05, 2007 2:44 pm

Re: Is this okay to do with an HSA?

Post by jebmke » Wed Jan 06, 2016 4:18 pm

2retire wrote:I should clarify. My company has an HSA specific direct deposit form that I fill out. They can direct my HSA money to a different place than my pay check. As far as I understand, they would take the amount I specified out of my paycheck, pre-tax, and deposit it into the account I tell them to.

I was wondering if there is something special about an HSA bank accounts. For example, does it have to be registered with the government as such. If the IRS saw my HSA money going into a regular old checking account, would that cause red flags. As soon as it hits my checking account, I plan to immediately transfer it to my HSA Bank.
Well, one thing for sure is that HSA accounts are reported to the IRS annually by the HSA custodian bank. These reports are also sent to you.

I think the problem will be that your employer may not be able to (legally) transfer money to your regular bank and report it on your W2 as an HSA deduction.
When you discover that you are riding a dead horse, the best strategy is to dismount.

gclancer
Posts: 480
Joined: Sat Apr 27, 2013 10:34 am

Re: Is this okay to do with an HSA?

Post by gclancer » Wed Jan 06, 2016 4:52 pm

It depends. Does your employer make HSA contributions under a Section 125 Cafeteria Plan (i.e. pre FICA and income tax)? It sounds like they do, in which case, yes, health savings account contributions must be deposited into a health savings account.

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