Barb Yearout, president of Chard Snyder, an Ascensus company, discussed Chard Snyder’s sponsorship of the CancerFree KIDS 100 Mile Challenge on WKRC Cincinnati’s What’s Happening in Health.
Yearout talks about the importance of CancerFree KIDS’ mission, along with Chard Snyder’s past and current support for the organization. She also notes how the 100 Mile Challenge can be used as a starting point to build and maintain a healthy lifestyle.
You may watch the clip here; the segment begins at 30:50.
Barb Yearout, president of Chard Snyder, an Ascensus company, contributed content about how individuals can make the most of their HSA accounts for investment purposes to the Cincinnati Business Courier.
“The majority of HSA account holders still think of an HSA as a spending vehicle instead of a savings tool,” says Yearout. “This means they could miss out on important tax advantages and the opportunity to save for future health care expenses.” She goes on to discuss potential HSA investment options, rules for when HSA balances may be invested, and investment contribution limits.
The IRS has released a pre-publication version of proposed regulations amending rules intended to increase the filing of electronic returns in accordance with the Taxpayer First Act of 2019. Additionally, the IRS has withdrawn previously proposed regulations regarding electronic filing that were published on May 31, 2018.
The new proposed regulations reduce the threshold by which filers must electronically file from 250 to 100 returns for the 2022 calendar year. For filings required after calendar year 2022, the threshold will be further reduced to 10 returns. Currently, the threshold is determined separately for each type of information return. The proposed regulations would remove this rule, thus, requiring all return types to be aggregated for determining the new thresholds. The regulations further clarify that for purposes of filing amended returns, the amended form must be filed in the same manner (electronic or hardcopy) as the original filing.
Information returns affected by the proposal include, but are not limited to, the following.
- Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
- Form 1042-S, Foreign Persons’ U.S. Source Income Subject to Withholding
- Form 945, Annual Return of Withheld Federal Income Tax
- Form 5498-ESA, Coverdell ESA Contribution Information
- Form 5498-QA, ABLE Account Contribution Information
- Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information
- Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits
- Form 5500, Annual Return/Report of Employee Benefit Plan
- Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan
- Form 5500-EZ, Annual Return of A One-Participant (Owners/Partners and Their Spouses) Retirement Plan or A Foreign Plan
- Form 5330, Return of Excise Taxes Related to Employee Benefit Plans
Filers with an inability to file electronically (i.e., lack of Internet service) may file with the IRS to request a waiver.
A period of 60 days for submitting comments on the guidance, or to request a public hearing, will begin upon publication in the Federal Register.
Senator Ben Sasse (R-NE) recently introduced two bills aimed at providing more flexibility for the use of health savings accounts (HSAs). Senate bill 2113 proposes to expand permissible distributions from an employee’s health flexible spending arrangement or health reimbursement arrangement to the employee’s HSA. Senate bill 2099 proposes to make HSAs more broadly available by removing the requirement that individuals be enrolled in a high deductible health plan. Further details of these proposals have not yet been made available.
A third bill has been introduced by Senator John Kennedy (R-LA). The Telehealth HSA Act would allow high deductible health plans to provide telehealth services before meeting the plan deductible without affecting HSA eligibility. Currently, employees may need to pay out of pocket for such services.
All three bills have been referred to the Senate Finance Committee for further consideration.
IRS Revenue Procedure (Rev. Proc.) 2021-25 provides the 2022 inflation-adjusted amounts for health savings accounts (HSAs) and the maximum amount that may be made newly available for expected benefit health reimbursement arrangements (HRAs).
The HSA 2022 calendar year annual limitation on deductions under Internal Revenue Code (IRC) Sec. 223(b)(2) is $3,650 for an individual with self-only coverage under a high deductible health plan (HDHP) and $7,300 for an individual with family coverage under an HDHP.
In calendar year 2022, under IRC Sec. 223(c)(2)(A), an HDHP is a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage. The annual out-of-pocket expenses—deductibles, co-payments, and other amounts (but not premiums)—cannot exceed $7,050 for self-only coverage or $14,100 for family coverage.
Under Pension Excise Tax Regulation Sec. 54.9831-1(c)(3)(vii), the maximum amount that may be made newly available for the plan year for an excepted benefit HRA is $1,800 for plan years beginning in 2022.
The IRS has issued Notice 2021-21, in which the IRS makes official the previously announced delay of the April 15, 2021 federal income tax filing due date for individuals for the 2020 tax year to May 17, 2021. This delay is a result of the ongoing COVID-19 Emergency Declaration issued in March 2020.
The tax return due date for an affected taxpayer is automatically postponed to May 17, 2021. An “affected taxpayer” is defined as any person with a federal income tax return or income tax payment filed on a Form 1040, U.S. Individual Income Tax Return, series with an original due date of April 15, 2021. No form, including IRS Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, is required to obtain this relief, and it applies to all schedules, returns, and other forms that are attachments to the Form 1040 series or required to be filed by the Form 1040 series due date.
In conjunction with the Form 1040 series delay, Notice 2021-21 also automatically postpones to May 17, 2021,
- the time for affected taxpayers to make 2020 contributions to their Traditional IRAs and Roth IRAs, health savings accounts (HSAs), Archer medical savings accounts (Archer MSAs), and Coverdell education savings accounts (Coverdell ESAs), and
- the time for reporting and payment of the 10 percent additional tax on amounts includible in gross income from 2020 IRA or employer-based retirement plan distributions.
The due date for filing and furnishing forms in the Form 5498, IRA Contribution Information, series is postponed to June 30, 2021.
This relief provided for filing federal income tax returns and paying federal income taxes does not apply to businesses or any other type of taxpayer who files federal income tax returns on forms other than the Form 1040 series. Notice 2021-21 further states that “no extension is provided in this notice for the payment or deposit of any other type of federal tax, including federal estimated income tax payments, or for the filing of any federal return other than the Form 1040 series and the Form 5498 series for the 2020 taxable year.”
While this guidance only applies to the filing of federal tax returns, many states have issued similar delays. Individuals are advised to review their state and local regulations to ensure compliance with all 2020 filing deadlines.
The IRS has issued Announcement 2021-7, indicating that amounts paid for personal protective equipment (PPE)—such as masks, hand sanitizer, and sanitizing wipes—that are primarily used to prevent the spread of COVID-19, are treated as amounts paid for medical care under Internal Revenue Code Section 213(d). As a result, the amounts are also eligible to be paid or reimbursed under health flexible spending arrangements (FSAs), health reimbursement arrangements (HRAs), and health savings accounts (HSAs).
Group health plans—including health FSAs and HRAs—may be amended pursuant to this announcement to provide for reimbursement of COVID-19 PPE expenses incurred for any period beginning on or after January 1, 2020. Employers choosing to amend their plans must do so by the last day of the first calendar year beginning after the end of the plan year in which the amendment is effective. Retroactive amendments are not permitted after December 31, 2022.
The Treasury Department and IRS have announced that tax filing due dates for 2020 tax year federal income tax returns, including the federal income tax payment deadline, will be automatically extended from April 15, 2021, to May 17, 2021. No special form must be filed to request the filing extension. The IRS will be providing formal guidance in the coming days.
While the postponement of federal income tax payments seems to suggest that certain other actions tied to the normal April 15, 2021 filing deadline may be extended as well—such as making 2020 IRA and health savings account (HSA) contributions, similar to the extension provided in 2020—it is not clear at this time.
The economic impact of the COVID-19 pandemic has been felt far and wide, both in the U.S. and globally. But what has it meant for tax-advantaged savings levels in vehicles such as retirement , 529, and health savings & flexible spending accounts? Our proprietary data, tracked over the course of 2020, reveal shifts in contribution and withdrawal behaviors by business owners and individuals in response to the financial challenges posed by the pandemic. Overall, these insights suggest a continued appreciation for the importance of savings and the ability to access these savings when needed.
- After the pandemic took hold in the U.S. in March 2020, employer retirement plan contribution activity was fairly volatile. Overall, employer contribution amounts remained steadily below projections, with the most dramatic drops in March and April and a notable recovery in May through July. As of year-end, contributions appeared to have settled at a more consistent monthly amount, yet they remained 6.8% lower than projected.
- As of December, 12.6% of employers restarted their plan matching contributions after some match interruption during March through November, either due to business interruption or temporarily suspending match.
- In 2020, we saw low employer adoption of CARES Act distribution and loan options relative to early industry projections, with just 16.6% of employers adopting coronavirus-related distributions (CRDs) and 9.9% adopting CARES loans.
- Eligible savers took CRDs at a higher rate in the final quarter of the year, with 2.0% taking a CRD in Q4. However, the overall total percentage of those taking CRDs remained very low for the full year, at just 4.9%. The availability of CARES loans expired at the end of September. By that time, only 1.4% of eligible savers had takes a CARES loan.
- The vast majority of savers “stayed the course” in 2020, with only 1.8% stopping their deferrals to their retirement plan (0% savings rate) and 2.6% reducing their savings rate.
- One-time contribution amounts to 529 accounts showed a slow yet steady improvement starting in August. In the fourth quarter, the average one-time 529 contribution amount rebounded to 2019 levels, but the number of savers making one-time contributions remained below prior-year levels.
- Qualified withdrawals were significantly reduced from prior-year levels, as measured both in the amounts withdrawn from accounts (14.6% decrease from 2019) and in the number of withdrawal transactions (16.7% decrease from 2019). This trend aligns with national statistics around declines in enrollment during the pandemic and a greater percentage of students attending school from home, reducing the need for room and board payments.
Health and Benefits
- According to data from Chard Snyder, an Ascensus company, qualifying events as a percentage of eligible savers was in line with year-over-year projections at the start of 2020, but ramped up 10% in March through May. This was driven by an increased level of employer hardships and changes in employment status. We saw a temporary recovery, with qualifying events dropping below 2019 levels in July; yet that was followed by a sharp increase to above-2019 levels in August and September. In the final months of the year, the number of qualifying events leveled out, showing a 2.2% increase over 2020 projections as of the end of December.
- Debit card activity linked to healthcare accounts (including HSAs, HRAs, and FSAs) was above projected levels as of year-end, with the number of transactions 28.3% higher and the average amount per transaction 33.3% higher than expected.
View and download the complete State of Savings report here.
Reference our previous report here. For the latest regulatory and legislative updates, visit our newsroom.
The IRS has issued Notice 2021-15, providing additional guidance and flexibility to employee benefit plans offering health FSA and dependent care arrangements. Because of COVID-19, employees participating in these programs are more likely to have unused amounts in these accounts as a result of changes in anticipated expenses during the pandemic. To qualify as a cafeteria plan under IRC Section 125, funds remaining at the end of the plan year generally cannot be carried over to future plan years, and restrictions apply when modifying elections after the start of the plan year.
While initial temporary relief was made available for 2020, the Consolidated Appropriations Act of 2021, enacted in December 2020, provides the following additional flexibility for 2021 and 2022 plan years.
- Permits post-termination reimbursements through the end of the plan year that participation ceased for health and dependent care FSAs.
- Creates special rule for dependent care programs, allowing the plan to substitute “under age 14” for “under age 13” as the maximum age for qualifying dependents.
- Provides carryover of unused funds into the subsequent plan year from the 2020 and 2021 plan years.
- Allows health and dependent care FSAs to offer a grace period extension of 12 months after the end of the plan year.
- Permits mid-year election changes by plan participants of health and dependent care FSAs for plan years ending in 2021 without a change in status.
Notice 2021-15 provides illustrative examples of these provisions, details on interaction with COBRA continuation coverage, and timing of plan amendments. The notice also provides additional relief that allows employers to retroactively amend their
- cafeteria plans to permit mid-year election changes for employer-sponsored health coverage, and
- health reimbursement arrangements to permit reimbursement of over-the-counter drugs without a prescription and menstrual care products.