Archer MSA Contributions – Paul Gaulkin CPA

Drugs on top of dollar billsAn Archer MSA is a trust created solely to pay the qualified medical expenses of the individuals who establish the trust. In this article we will discuss the specifics of making contributions to an Archer MSA trust.

Archer MSA Contributions

When a person makes a contribution to an Archer MSA trust, they must make their contribution in cash. Contributions of stock or other types of property will not be allowed.

In terms of the maximum deductible contribution that can be made to the Archer MSA will depend on whether the health insurance plan provides self only coverage or family coverage. An eligible individual may deduct the contributions that are made to an Archer MSA during the year in an amount that does not exceed:

1. 65% of the annual deductible for individuals with self only coverage, or

2. 75% of the annual deductible for individuals with family coverage

An example of how to calculate the self only coverage would be to multiple the amount of 65% times the allowed deductible. If the deductible is $2,500 the individual would multiple .65 x $2,500 and they would have a deductible contribution to an Archer MSA of up to $1,625.

Similarly, if they had a family coverage plan, they would multiple .75 x $2,500 and their deductible contribution to an Archer MSA for the year would be $1,875.

Contributions after Jan 1st

In the event that an individual contributes to an Archer MSA and the coverage began later than January 1st, they will need to use a more specific way of determining their maximum contribution limit. To do this, you need to:

1. Determine the maximum annual amount that may be contributed to the Archer MSA. An example would be $2,500 for a self only coverage plan. Therefore, they will be able to contribute .65 x $2,500 for a total of $1,625.

2. Next, divide the maximum annual contribution amount by 12 to determine the per month contribution limit. In this case we would divide $1,625 by 12 for a total of $135.42.

3. Then determine the number of months that you will be able to have coverage. In this example we will say that there are 6 months left.

4. Last, multiply the number of months remaining by the monthly maximum contribution. In this case we would multiple $135.42 x 6 for a total of $812.50.

About Paul Gaulkin CPA

Paul Gaulkin is a Certified Public Accountant and enrolled with the U.S. Treasury to practice before the IRS. Mr. Gaulkin possesses unique technical knowledge in the process of securing relief for taxpayers nationwide with IRS and State tax problems. With an accounting degree from Florida International University, he is able to transform complex tax and accounting problems into easy to understand solutions.


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