"Medical Savings Accounts"


A

Allan Needell

All,

Any pitfalls or tricks to tracking medical or childcare savings accounts
(pretax accounts)? Should I just create new accounts, call them savings
accounts and transfer pretax dollars from each paycheck into them, and then
transfer dollars from the accounts to my checking accounts as expenses are
reimbursed?

Ben.
 
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D

Dick Watson

Sounds like you've got the drill down. I'm not sure there is any advantage
calling them savings accounts vs. just a basic Cash account.
 
R

Ralph Lehman

Any ideas on how to treat the account if it is a FSA??? My FSA allows me to
draw upon it starting January 1. As an example the account has $1200 on the
first of the year and I can draw it out as used even though I only put $100
/ month into the account. Any ideas or suggestions for how to handle this
concept?

Thanks

Ralph Lehman
 
D

Dick Watson

I draw the account down to a negative number. That tells me where I'm really
at--i.e., I'm spending/getting reimbursed faster than the money is being
taken in.
 
C

Chris Cowles

That is true for Medical savings accounts only. You can't do it in Dependent
Care savings accounts.

I do what Dick suggests, ie, making the account balance negative. Future
paycheck deductions return it to 0 over time. If you leave your employment,
you are not required to pay it back. I don't know if the IRS considers that
taxable income, but you should record it as income in some fashion for your
personal budget.
 
R

Ralph Lehman

Thanks for the insight. Also, I didn't know that you don't have to pay it
back when you leave your employment. That is interesting.

Ralph
 
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C

Chris Cowles

I believe that's federal law. If you're thinking of leaving your employer
anyway, it might behoove you to schedule major surgery immediately after the
first of the year, pay for it with MSA deductions, and quit work immediately
after. <grin>
 

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