
Form 1099-SA and Instructions 
Distributions From an HSA, Archer MSA, or Medicare Advantage MSA
2011

Cat. No. 33594F

Department of the Treasury
Internal Revenue Service

In 1 File
Print pages 1-5 and 1-2

Transcribed by
The Lighthouse for the Blind
New Orleans, LA
2010

Contents

Section:  Page
Form 1099-SA:  1
     Copy A--For IRS:  1
     Copy B--For Recipient:  2
     Instructions for Recipient:  3
     Copy C--For Trustee/Payer:  4
     Instructions for Trustee/Payer:  5
2011 Instructions for Forms 1099-SA and 5498-SA:  1
     What's New:  1
     Reminder:  1
     Specific Instructions for Form 1099-SA:  1
     Specific Instructions for Form 5498-SA:  2

This electronic edition contains the entire text of the print editions.

<page 1>

Form 1099-SA
Distributions From an HSA, Archer MSA, or Medicare Advantage MSA
2011

Copy A
For Internal Revenue Service Center

File with Form 1096.

VOID --; CORRECTED --
TRUSTEE'S/PAYER'S name, street address, city, state, and ZIP code: ----
PAYER'S federal identification number: ----
RECIPIENT'S identification number: ----
RECIPIENT'S name: ----
Street address (including apt. no.): ----
City, state, and ZIP code: ----
Account number (see instructions): ----

1. Gross distribution: $----
2. Earnings on excess cont.: $----
3. Distribution code: ----
4. FMV on date of death: $----
5. HSA --; Archer MSA --; MA MSA --

For Privacy Act and Paperwork Reduction Act Notice, see the 2011 General Instructions for Certain Information Returns.

<page 2>

Form 1099-SA
Distributions From an HSA, Archer MSA, or Medicare Advantage MSA
2011

Copy B
For Recipient

CORRECTED (if checked) --
TRUSTEE'S/PAYER'S name, street address, city, state, and ZIP code: ----
PAYER'S federal identification number: ----
RECIPIENT'S identification number: ----
RECIPIENT'S name: ----
Street address (including apt. no.): ----
City, state, and ZIP code: ----
Account number (see instructions): ----

1. Gross distribution: $----
2. Earnings on excess cont.: $----
3. Distribution code: ----
4. FMV on date of death: $----
5. HSA --; Archer MSA --; MA MSA --

This information is being furnished to the Internal Revenue Service.

<page 3>

Instructions for Recipient

Distributions from a health savings account (HSA), Archer MSA, or Medicare Advantage (MA) MSA are reported to you on Form 1099-SA. File Form 8853 or Form 8889 with your Form 1040 to report a distribution from these accounts even if the distribution is not taxable. The payer is not required to compute the taxable amount of any distribution.

An HSA or Archer MSA distribution is not taxable if you used it to pay qualified medical expenses of the account holder and family or you rolled it over. An HSA may be rolled over to another HSA; an Archer MSA may be rolled over to another Archer MSA or an HSA. An MA MSA is not taxable if you used it to pay qualified medical expenses of the account holder only. If you did not use the distribution from an HSA, Archer MSA, or MA MSA to pay for qualified medical expenses, or in the case of an HSA or Archer MSA, you did not roll it over, you must include the distribution in your income (see Form 8853 or Form 8889). Also, you may owe a penalty.

For more information, see the separate instructions for Form 8853 and Form 8889. Also see Pub. 969.

Spouse beneficiary. If you inherited an Archer MSA or MA MSA because of the death of your spouse, special rules apply. See the Instructions for Form 8853. If you inherited an HSA because of the death of your spouse, see the Instructions for Form 8889.

Estate beneficiary. If the HSA, Archer MSA, or MA MSA account holder dies and the estate is the beneficiary, the fair market value (FMV) of the account on the date of death is includible in the account holder's gross income. Report the amount on the account holder's final income tax return.

Nonspouse beneficiary. If you inherited the HSA, Archer MSA, or MA MSA from someone who was not your spouse, you must report as income on your tax return the FMV of the account as of the date of death. Report the FMV on your tax return for the year the account owner died even if you received the distribution from the account in a later year. See the Instructions for Form 8853 or Form 8889. Any earnings on the account after the date of death (box 1 minus box 4 of Form 1099-SA) are taxable. Include the earnings on the "Other income" line of your tax return.

Account number. May show an account or other unique number the payer assigned to distinguish your account.

Box 1. Shows the amount received this year. The amount may have been a direct payment to the medical service provider or distributed to you.

Box 2. Shows the earnings on any excess contributions you withdrew from an HSA or Archer MSA by the due date of your income tax return. If you withdrew the excess, plus any earnings, by the due date of your income tax return, you must include the earnings in your income in the year you received the distribution even if you used it to pay qualified medical expenses. This amount is included in box 1. Include the earnings on the "Other income" line of your tax return. An excise tax of 6% for each tax year is imposed on you for excess individual and employer contributions that remain in the account. See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts.

Box 3. These codes identify the distribution you received: 1--Normal distribution; 2--Excess contributions; 3--Disability; 4--Death distribution other than code 6; 5--Prohibited transaction; 6--Death distribution after year of death to a nonspouse beneficiary.

Box 4. If the account holder died, shows the FMV of the account on the date of death.

Box 5. Shows the type of account that is reported on this Form 1099-SA.

<page 4>

Form 1099-SA
Distributions From an HSA, Archer MSA, or Medicare Advantage MSA
2011

Copy C
For Trustee/Payer

VOID --; CORRECTED --
TRUSTEE'S/PAYER'S name, street address, city, state, and ZIP code: ----
PAYER'S federal identification number: ----
RECIPIENT'S identification number: ----
RECIPIENT'S name: ----
Street address (including apt. no.): ----
City, state, and ZIP code: ----
Account number (see instructions): ----

1. Gross distribution: $----
2. Earnings on excess cont.: $----
3. Distribution code: ----
4. FMV on date of death: $----
5. HSA --; Archer MSA --; MA MSA --

For Privacy Act and Paperwork Reduction Act Notice, see the 2011 General Instructions for Certain Information Returns.

<page 5>

Instructions for Trustee/Payer

General and specific form instructions are provided as separate products. The products you should use to complete Form 1099-SA are the 2011 General Instructions for Certain Information Returns and the 2011 Instructions for Forms 1099-SA and 5498-SA. A chart in the general instructions gives a quick guide to which form must be filed to report a particular payment. To order these instructions and additional forms, visit IRS.gov or call 1-800-TAX-FORM (1-800-829-3676).

Caution: Because paper forms are scanned during processing, you cannot file Forms 1096, 1097, 1098, 1099, 3921, 3922, or 5498 that you print from the IRS website.

Due dates. Furnish Copy B of this form to the recipient by January 31, 2012.

File Copy A of this form with the IRS by February 28, 2012. If you file electronically, the due date is April 2, 2012. To file electronically, you must have software that generates a file according to the specifications in Pub. 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically. IRS does not provide a fill-in form option.

Need help? If you have questions about reporting on Form 1099-SA, call the information reporting customer service site toll free at 1-866-455-7438 or 304-263-8700 (not toll free). For TTY/TDD equipment, call 304-579-4827 (not toll free). The hours of operation are Monday through Friday from 8:30 a.m. to 4:30 p.m., Eastern time.

<page 1>

2011
Instructions for Forms 1099-SA and 5498-SA

Section references are to the Internal Revenue Code unless otherwise noted.

What's New

Pilot program for truncating an individual's identifying number on paper payee statements has ended. Filers of Forms 1099-SA and 5498-SA must show the recipient's (Form 1099-SA) and participant's (Form 5498-SA) complete identifying numbers on all copies of the forms.

Withdrawals of excess employer contributions and earnings on them from employee HSAs. Excess employer contributions (and the earnings on them) withdrawn from employee HSAs by the employer should not be reported as a distribution on Form 1099-SA or as a contribution on Form 5498-SA.

Reminder

In addition to these specific instructions, you should also use the 2011 General Instructions for Certain Information Returns (Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G). Those general instructions include information about the following topics.
-- Backup withholding.
-- Electronic reporting requirements.
-- Penalties.
-- Who must file (nominee/middleman).
-- When and where to file.
-- Taxpayer identification numbers.
-- Statements to recipients.
-- Corrected and void returns.
-- Other general topics.

You can get the general instructions from IRS.gov or by calling 1-800-TAX-FORM (1-800-829-3676).

Specific Instructions for Form 1099-SA

File Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA, to report distributions made from an HSA, Archer MSA, or Medicare Advantage MSA (MA MSA). The distribution may have been paid directly to a medical service provider or to the account holder. A separate return must be filed for each plan type.

Transfers. Do not report a trustee-to-trustee transfer from one Archer MSA or MA MSA to another Archer MSA or MA MSA, one Archer MSA to an HSA, or from one HSA to another HSA. For reporting purposes, contributions and rollovers do not include transfers.

HSA mistaken distributions. If amounts were distributed during the year from an HSA because of a mistake of fact due to reasonable cause, the account beneficiary may repay the mistaken distribution no later than April 15 following the first year the account beneficiary knew or should have known the distribution was a mistake. For example, the account beneficiary reasonably, but mistakenly, believed that an expense was a qualified medical expense and was reimbursed for that expense from the HSA. The account beneficiary then repays the mistaken distribution to the HSA.

Under these circumstances, the distribution is not included in gross income, is not subject to the 10 percent additional tax, and the payment is not subject to the excise tax on excess contributions. Do not treat the repayment as a contribution on Form 5498-SA.

Tip: As the trustee or custodian, you do not have to allow beneficiaries to return a mistaken distribution to the HSA. However, if you do allow the return of the mistaken distribution, you may rely on the account beneficiary's statement that the distribution was in fact a mistake. See Notice 2004-50, 2004-33 I.R.B. 196, Q/A-76, available at www.irs.gov/irb/2004-33_IRB/ar08.html. Do not report the mistaken distribution on Form 1099-SA. Correct any filed Form 1099-SA with the IRS and the account beneficiary as soon as you become aware of the error. See Corrected Returns on Paper Forms in the 2011 General Instructions for Certain Information Returns for more information.

Death of Account Holder

Archer MSAs and MA MSAs. If the account holder dies and the designated beneficiary is the spouse:
-- The spouse becomes the account holder of the Archer MSA,
-- An MA MSA is treated as an Archer MSA of the spouse for distribution purposes, and
-- Distributions from these accounts are subject to the rules that apply to Archer MSAs.

If the designated beneficiary is not the spouse or there is no named beneficiary, the account ceases to be an MSA as of the date of death and the fair market value (FMV) on that date is reported.

If there is more than one recipient, the FMV should be allocated among them, as appropriate.

If the beneficiary is the estate, enter the estate's name and taxpayer identification number (TIN) in place of the recipient's on the form.

Distribution in year of death. If you learn of the account holder's death and make a distribution to the beneficiary in the year of death, issue a Form 1099-SA and enter in:
-- Box 1, the gross distribution;
-- Box 3, code 4 (see page 2); and
-- Box 4, the FMV of the account on the date of death.

Distribution after year of death. If you learn of the death of the account holder and make a distribution after the year of death, issue a Form 1099-SA in the year you learned of the death of the account holder. Enter in:
-- Box 1, the gross distribution;
-- Box 3, one of the following codes (see page 2): 1--if the beneficiary is the spouse, 4--if the beneficiary is the estate, or 6--if the beneficiary is not the spouse or estate;
-- Box 4, the FMV of the account on the date of death.

HSAs. If the account holder dies and:
-- The designated beneficiary is the surviving spouse, the spouse becomes the account holder of the HSA.
-- The spouse is not the designated beneficiary, the account ceases to be an HSA on the date of the account holder's death. The FMV of the account as of the date of death is required to be reported in box 4. Follow the rules and coding above under Distribution in year of death and Distribution after year of death.

Statements to Recipients

If you are required to file Form 1099-SA, you must provide a statement to the recipient. For more information about the requirement to furnish a Form 1099-SA or acceptable substitute statement to recipients, see part M in the 2011 General Instructions for Certain Information Returns.

Account Number

The account number is required if you have multiple accounts for a recipient for whom you are filing more than one Form 1099-SA. Additionally, the IRS encourages you to designate an account number for all Forms 1099-SA that you file. See part L in the 2011 General Instructions for Certain Information Returns.

Box 1. Gross Distribution

Enter the total amount of the distribution. Include any earnings separately reported in box 2. You are not required to determine the taxable amount of a distribution. Do not report a negative amount in box 1. Do not report the withdrawal of excess employer contributions (and the earnings on them) returned to an employer as a distribution from an employee's HSA. Do not report excess MA MSA contributions returned to the Secretary of Health and Human Services or his or her representative.

<page 2>

Box 2. Earnings on Excess Contributions

Enter the total earnings distributed with any excess HSA or Archer MSA contributions returned by the due date of the account holder's tax return. Include this amount in box 1. Report earnings on other distributions only in box 1.

Tip: For HSAs and Archer MSAs, if you are reporting earnings on a distribution of excess contributions, use the method under Regulations section 1.408-11 for calculating the net income attributable to IRA contributions that are distributed as a returned contribution. If the amount in box 2 includes earnings on excess contributions, enter distribution code 2 in box 3.

Box 3. Distribution Code

Enter the appropriate distribution code from the list below that shows the type of distribution.
1--Normal distributions: Use this code for normal distributions to the account holder and any direct payments to a medical service provider. Use this code if no other code applies. Also, see Distribution after year of death on page 1.
2--Excess contributions: Use this code for distributions of excess HSA or Archer MSA contributions to the account holder.
3--Disability: Use this code if you made distributions after the account holder was disabled (see section 72(m)(7)).
4--Death distribution other than code 6: Use this code for payments to a decedent's estate in the year of death. Also use this code for payments to an estate after the year of death. Do not use with code 6. See Death of Account Holder on page 1.
5--Prohibited transaction: See sections 220(e)(2) and 223(e)(2).
6--Death distribution after year of death to a nonspouse beneficiary: Use this code for payments to a decedent's nonspouse beneficiary, other than an estate, after the year of death. Do not use with code 4.

Box 4. FMV on Date of Death

Enter the FMV of the account on the date of death. See Death of Account Holder on page 1.

Box 5. Checkbox

Check the box to indicate if this distribution was from an HSA, Archer MSA, or MA MSA.

Specific Instructions for Form 5498-SA

File Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, with the IRS on or before May 31, 2012, for each person for whom you maintained an HSA, Archer MSA, or Medicare Advantage MSA (MA MSA) during 2011. You are required to file if you are the trustee or custodian of an HSA, Archer MSA, or MA MSA. A separate form is required for each type of plan.

For HSA or Archer MSA contributions made between January 1, 2012, and April 17, 2012, you should obtain the participant's designation of the year for which the contributions are made.

For repayment of a mistaken distribution amount, see HSA mistaken distributions on page 1.

Rollovers

You must report the receipt of a rollover from one Archer MSA to another Archer MSA, and receipt of a rollover from an Archer MSA or an HSA to an HSA in box 4.

Transfers

Do not report a trustee-to-trustee transfer from one Archer MSA or MA MSA to another Archer MSA or MA MSA, from an Archer MSA to an HSA, or from one HSA to another HSA. For reporting purposes, contributions and rollovers do not include these transfers. However, see box 2 on this page for the reporting of a trustee-to-trustee transfer from an IRA to an HSA and box 4 for the reporting of a direct transfer of employer contributions from a health reimbursement arrangement (HRA) or health flexible spending arrangement (FSA) to an HSA.

Total Distribution, No Contributions

Generally, if a total distribution was made from an HSA or Archer MSA during the year and no contributions were made for that year, you need not file Form 5498-SA nor furnish a statement to the participant to reflect that the FMV on December 31 was zero.

Death of Account Holder

In the year an HSA, Archer MSA, or MA MSA owner dies, generally you must file a Form 5498-SA and furnish a statement for the decedent. If the designated beneficiary is the spouse:
-- The spouse becomes the account holder of the HSA or Archer MSA.
-- An MA MSA is treated as an Archer MSA of the spouse for distribution purposes, but no new contributions may be made to the account.

If the designated beneficiary is not the spouse or there is no designated beneficiary, the account ceases to be an HSA, Archer MSA, or MA MSA.

Statements to Participants

If you are required to file Form 5498-SA, you must provide a statement to the participant (generally Copy B) by May 31, 2012. You may, but you are not required to, provide participants with a statement of the December 31, 2011, FMV of the participant's account by January 31, 2012. For more information about statements to participants, see part M in the 2011 General Instructions for Certain Information Returns.

If you furnished a statement of the FMV of the account to the participant by January 31, 2012, and no reportable contributions, including rollovers, were made for 2011, you need not furnish another statement (or Form 5498-SA) to the participant to report zero contributions. However, you must file Form 5498-SA with the IRS by May 31, 2012, to report the December 31, 2011, FMV of the account.

Caution: If you do not furnish another statement to the participant because no reportable contributions were made for the year, the statement of the FMV of the account must contain a legend designating which information is being furnished to the Internal Revenue Service.

Account Number

The account number is required if you have multiple accounts for a recipient for whom you are filing more than one Form 5498-SA. Additionally, the IRS encourages you to designate an account number for all Forms 5498-SA that you file. See part L in the 2011 General Instructions for Certain Information Returns.

Box 1. Employee or Self-Employed Person's Archer MSA Contributions Made in 2011 and 2012 for 2011

Enter the employee's or self-employed person's regular contributions to the Archer MSA made in 2011 and through April 17, 2012, for 2011. Report gross contributions, including any excess contributions, even if the excess contributions were withdrawn. No HSA information is to be reported in box 1.

Box 2. Total Contributions Made in 2011

Enter the total HSA or Archer MSA contributions made in 2011. Include any contribution made in 2011 for 2010. Also include qualified HSA funding distributions (trustee-to-trustee transfers from an IRA to an HSA under section 408(d)(9)) received by you during 2011. Any excess employer contributions (and the earnings on them) withdrawn by the employer pursuant to Notice 2008-59, Q/A 24, available at www.irs.gov/irb/2008-29_IRB/ar11.html, should not be reported as a contribution. You may, but you are not required to, report the total MA MSA contributions the Secretary of Health and Human Services or his or her representative made in 2011. Do not include amounts reported in box 4.

Box 3. Total HSA or Archer MSA Contributions Made in 2012 for 2011

Enter the total HSA or Archer MSA contributions made in 2012 for 2011.

Box 4. Rollover Contributions

Enter rollover contributions to the HSA or Archer MSA received by you during 2011. Include qualified HSA distributions (direct transfers of employer contributions from FSAs and HRAs to an HSA under section 106(e)). These amounts are not to be included in box 2.

Box 5. Fair Market Value of HSA, Archer MSA, or MA MSA

Enter the FMV of the account on December 31, 2011.

Box 6. Checkbox

Check the box to indicate if this account is an HSA, Archer MSA, or MA MSA.

End of Form 1099-SA and Instructions