Trustees/Custodians




The Basics of HSAs Who Can Have an HSA? Contributing to an HSA Using Your HSA Setting Up Your HSA Managing Your HSA Employer Participation in HSAs Trustees/Custodians


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We are a bank/credit union, do we have to seek approval to offer HSAs? We are not a bank or a credit union, who else is allowed to offer HSAs? What is the difference between an HSA “custodian” and an HSA “trustee”? Do we have to use specific forms to establish these accounts? What information must be reported? What rules can we set regarding account administration? Can HSA accounts be invested? Do we have to verify that distributions from an HSA were used only for “qualified medical expenses”?
  • We are a bank/credit union, do we have to seek approval to offer HSAs?
    • Banks and credit unions are automatically approved to offer HSAs to their customers as either a trust or a custodial account.


  • We are not a bank or a credit union, who else is allowed to offer HSAs?
    • Insurance companies and other entities who are approved trustees/custodians of IRAs are approved to offer HSAs. Additional entities wishing to become approved trustees/custodians of HSAs can apply to the IRS to do so.


  • What is the difference between an HSA “custodian” and an HSA “trustee”?
    • The differences between a “custodian” and a “trustee” are minor. A trust is a legal entity under which assets are actually owned and held on behalf of a beneficiary. The trustee has some level of discretionary fiduciary authority over the assets of the fund. The trustee must exercise that authority in the best interests of the beneficiary. A custodial arrangement, on the other hand, is like a trust, but the custodian simply holds the assets on behalf of the owner of the assets. Other than holding the assets and doing as the owner orders, the custodian has no fiduciary obligations to the owner. The determination of what constitutes a trust or custodial arrangement is a determination made under state law.


  • Do we have to use specific forms to establish these accounts?
    • Banks or credit unions can modify their existing IRA enrollment forms to reflect HSAs, or use the model IRS forms. These model forms are available from the IRS or can be downloaded from the Treasury & IRS web sites.


  • What information must be reported? Do we have to use specific forms to establish these accounts?
    • Reporting requirements are straightforward. Form 5498 is used to report total contributions made to the account during the year and the value of the account at the end of the year. Form 1099-SA reports the total distributions taken from the account during the year. Both forms must be sent to the account owner and the IRS. Both forms and instructions for completing the forms are available from the IRS or can be downloaded from the Treasury and IRS web sites.


  • What rules can we set regarding account administration?
    • Minimum deposit, minimum balance requirements, minimum distribution requirements, distribution timing requirements, and account fees can be set by the trustee/custodian (i.e., the HSA rules do not apply any additional conditions on an HSA trustee or custodian).


  • Can HSA accounts be invested?
    • vHSA funds can be invested in the same types of investments as IRAs. You do not have to offer all investment options to account holders.


  • Do we have to verify that distributions from an HSA were used only for “qualified medical expenses”?
    • Do we have to verify that distributions from an HSA were used only for “qualified medical expenses”?

    Substantiation that distributions were used for qualified medical expenses is not required.