Hello,

With respect to HSAs (which were the main subject to the March issue), can you please confirm the following:

S. Corp; dental practice; sole dentist is the 100% owner; 4 other employees (all part-time).
Group medical insurance plan – 2 of the 4 employees are enrolled, w/ the dentist in a HDHP combined w/ an HSA.
There is no cafeteria plan/other benefits provided.

According to IRA Pub. 969, amounts contributable by an employer to their employees’ HSAs are generally not subject to employment taxes.

Separately, on the HSA Resources website it notes that employers may make pre-tax contributions to their employee’s HSAs if they have a cafeteria plan in place that provides for such contributions (which would not be subject to withholding from wages for income tax or subject to FICA or FUTA).

Questions:

1. If the dentist wishes to make contributions into her HSA from payroll withholding, is this permitted since there is no cafeteria plan? If so, please confirm they would be able to be deposited pre-tax AND avoiding FICA and FUTA tax.

2. I assume that the dental practice may not make contributions (which would not be subject to employment taxes) to the dentist’s HSA since there is no cafeteria plan in place.

3. If 1 and 2 are both no, are you aware if the above practice may set up a cafeteria plan for the sole purpose of enabling 1 or 2 to occur?

Thank you!

Jason