§4980E Failure of Employer to Make Comparable Archer Msa Contributions

Summary

If an employer puts money into employees’ Archer MSAs but does not give comparable contributions to all the employees who have the same kind of coverage that year, the employer must pay a tax. The tax equals 35 percent of all the money the employer put into employees’ Archer MSAs for employee tax years that end with or fall inside that calendar year. The tax can be partly or fully forgiven if the failure happened because of a reasonable cause and not because the employer willfully ignored the rule, and if the tax would be excessive compared to the mistake. An employer meets the rule only if it gives comparable contributions to every comparable participating employee for each coverage period that year. “Comparable contributions” means either the same dollar amount for each person or the same share of the plan’s annual deductible. Employees who work only part of the year get a prorated comparable amount. “Comparable participating employees” means everyone eligible under the employer’s high-deductible health plan who has the same coverage category (self-only or family). Part-time workers are handled separately; a part-time worker is someone who usually works under 30 hours per week. Employers treated as one under tax rules in section 414 are treated as a single employer here. Terms also used in section 220 have the same meanings.