8834 / Can employers allow employees to roll funds into their HSAs from HRAs or FSAs? What is a qualified HSA distribution?

There are special comparability rules for qualified HSA distributions contributed to HSAs on or after December 20, 2006, and before January 1, 2012. Effective January 1, 2010, the comparability rules of IRC Section 4980G do not apply to amounts contributed to employee HSAs through qualified HSA distributions.

To satisfy comparability rules, if an employer offers qualified HSA distributions to any employee who is an eligible individual covered under any HDHP, the employer must offer qualified HSA distributions to all employees who are eligible individuals covered under any HDHP. If an employer offers qualified HSA distributions only to employees who are eligible individuals covered under an employer’s HDHP, the employer is not required to offer qualified HSA distributions to employees who are eligible individuals but are not covered under the employer’s HDHP.²

1. IRC § 106(e)(5).