The 401(h) blog
Long-form 401(h) education.
Plain-English articles for business owners, CPAs, financial advisors, TPAs, and actuaries.
What Is a 401(h) Plan? A Plain-English Guide for Business Owners
A 401(h) account is a separate sub-account inside a qualified pension or annuity plan that may be used to fund retiree medical benefits. Here's the plain-English version every business owner should read first.
401(h) Plan Rules: What Business Owners and Advisors Need to Know
401(h) accounts are powerful but rule-driven. Five buckets — documentation, accounting, incidental benefit, nondiscrimination, and funding — determine whether the structure stands up.
401(h) vs HSA: What's the Difference?
An HSA is an individual, portable account you own. A 401(h) is a sub-account of an employer's qualified retirement plan. They are not substitutes for each other.
401(h) vs HRA: How Retiree Medical Benefits Compare
HRAs and 401(h) accounts can both play a role in retiree medical strategies, but the regulatory homes, funding mechanics, and integration with retirement plans are very different.
Can a Cash Balance Plan Include a 401(h) Account?
Cash balance plans look like account-based plans but are defined benefit plans for IRC purposes — which means they can also host a 401(h) sub-account.
How 401(h) Plans Can Help Fund Retiree Medical Expenses
Pre-funding retiree medical benefits brings discipline to one of retirement planning's biggest unknowns. Here's how 401(h) sub-accounts contribute to that picture.
Who Is Eligible for 401(h) Retiree Medical Benefits?
401(h) eligibility is not generic. It is set by the plan document for a defined retiree class, subject to nondiscrimination and incidental-benefit rules.
401(h) Plan Contribution Limits and Funding Rules Explained
There is no IRA-style number that caps 401(h) funding. Funding is actuarial, ongoing, and constrained by the incidental-benefit ceiling.
401(h) Plans for Small Business Owners: When Do They Make Sense?
401(h) strategies tend to land best with owners who already have — or are deliberately building — a defined benefit or cash balance plan.
Common 401(h) Plan Mistakes to Avoid
Most 401(h) failures trace to the same handful of structural issues. Here are the ones advisors see repeatedly — and how to avoid them.
Can 401(h) Plans Pay Medicare Premiums?
Medicare premiums are a frequent question. The short answer: it depends on the plan's definition of qualified medical expenses and on applicable law.
401(h) Plans for CPAs: Questions to Ask Before Recommending One
Before any 401(h) recommendation lands in a client file, a CPA can stress-test the idea with a handful of structural and contextual questions.
Defined Benefit Plan + 401(h): How the Strategy Works
Defined benefit plans paired with 401(h) sub-accounts can help employers formalize and pre-fund a defined stream of retiree medical benefits.
401(h) Plan FAQ: 25 Questions Answered
A consolidated FAQ covering 25 of the most-asked 401(h) questions in one place — written for business owners, CPAs, and advisors.
401(h) Plan Design Checklist for Advisors
Most 401(h) work boils down to three buckets: document, design, administer. This checklist helps advisors keep all three honest.
How to Set Up a 401(h) Plan: A Step-by-Step Overview
Setting up a 401(h) account isn't a single form — it's a coordinated amendment to a qualified pension or annuity plan with actuarial, legal, and administrative steps.
401(h) vs 401(k): The Differences Owners Actually Need to Know
Same letter prefix, very different vehicles. A 401(k) is your retirement plan; a 401(h) is a medical sub-account inside a different kind of qualified plan entirely.
401(h) vs 401(a): Code Sections, Vehicles, and What Each Actually Covers
401(a) is the umbrella Code section under which most qualified plans live; 401(h) is a specific sub-account feature inside certain of those plans.
401(h) Plan Tax Benefits: What Owners and CPAs Should Know
The tax story for 401(h) is unusually clean: employer-deductible going in, tax-deferred while invested, and generally tax-free coming out for qualified medical expenses.
401(h) vs VEBA: Which Retiree Medical Vehicle Fits?
Both 401(h) accounts and VEBA trusts can pre-fund retiree medical benefits. Which fits depends on plan ecosystem, participant class, and funding philosophy.
401(h) Account Funding Strategies: How Money Gets In
Funding a 401(h) is an actuarial decision, not a number you pick. Here are the strategies that drive how money flows into the sub-account over time.
401(h) Plan Investment Options and Considerations
401(h) assets typically invest alongside the underlying qualified plan, with separate accounting and fiduciary care. Here's what design teams weigh.
401(h) Plan Distributions and Claims: How Retirees Get Paid
Retirees access 401(h) benefits through a documented claims process — substantiated, eligible expenses reimbursed according to plan terms.
401(h) Plans for Doctors and Dentists: Why the Specialty Fits the Vehicle
Physician and dental practices frequently sit in the structural sweet spot for 401(h): high owner income, an existing cash balance or DB plan, and real retiree medical concern.
401(h) Plans for Law Firms: Partners, Associates, and Plan Design
Law firms that already run cash balance or DB plans for partners are natural candidates to evaluate 401(h) — with care around partner-vs-associate dynamics.
401(h) Plans for Family Businesses: Succession, Continuity, and Retiree Medical
Family-owned businesses sometimes use 401(h) to make retiree medical commitments durable across generational and ownership changes.
401(h) Plans and ERISA: Fiduciary, Reporting, and Plan Asset Considerations
ERISA touches 401(h) at every stage — fiduciary duty, plan-asset handling, reporting, and participant communications. None of it is optional.
401(h) Plans and Form 5500: What Gets Reported and Where
401(h) doesn't file its own Form 5500 — it shows up inside the underlying qualified plan's filing. Here's how it typically appears.
401(h) Plan Fiduciary Duties: A Plain-English Overview
Plan fiduciaries owe the same duties for 401(h) assets as for the retirement portion. Here's how those duties show up in practice.
401(h) Plan Actuarial Valuation: What the Actuary Actually Does
The actuary is the engine room of any 401(h) design. Here's a plain-English tour of what they're modeling and why.
401(h) Plan Spouse and Dependent Coverage: How It Works
401(h) coverage frequently extends to spouses and qualifying dependents — when the plan document provides for it.
Can a 401(h) Plan Pay for Long-Term Care?
Long-term care is a frequent 401(h) question. The answer hinges on plan-document definitions and applicable law.
401(h) vs Section 115 Trust: Public-Sector Retiree Medical Funding
Public employers sometimes weigh Section 115 trusts for retiree medical funding. Here's how that compares to the 401(h) framework.
Terminating a 401(h) Plan: What Sponsors Need to Know
Termination is a real possibility for any plan feature. Here's a high-level look at the steps and issues a sponsor faces when winding down a 401(h).
401(h) and the Plan Restatement Cycle: Staying Current
Plan documents are restated on a defined cycle. Here's how 401(h) language fits the cadence and why drift is dangerous.
What Is a Cash Balance Plan? A Plain-English Guide
Cash balance plans look like 401(k) accounts but are defined benefit plans under the Code. They are powerful for owner-led businesses — and can host a 401(h) sub-account.
Cash Balance Plan vs 401(k): Side-by-Side for Owners
Cash balance and 401(k) plans answer different questions for owner-led businesses. They're often used together — not in place of each other.
How Cash Balance Plans Work: Pay Credits, Interest Credits, and Funding
Pay credit + interest credit = hypothetical account growth. Actuarial funding fills the trust. Here's the mechanics, simply.
Defined Benefit Plan Explained: How DB Plans Work and Why Owners Use Them
Defined benefit plans promise a future benefit by formula. Owners use them to accelerate retirement savings — and to host 401(h) retiree medical sub-accounts.
Defined Benefit vs Defined Contribution: Which Type Is Your Plan?
DB plans promise a benefit; DC plans accumulate an account. Different mechanics, different risks, different ability to host 401(h).
Retiree Healthcare Cost Planning: Framing the Largest Unknown
Retiree healthcare can be the largest unfunded liability of a retirement. Here's a clean framing — and where each vehicle plays a role.
Medicare and Employer Retiree Benefits: How They Fit Together
Medicare doesn't replace employer retiree benefits — it changes their shape. Coordination is the whole game.
Tax-Deductible Employer Retirement Contributions: The Big Picture
Employer contributions to qualified retirement plans are broadly deductible — within rules. Here's the big-picture framing, and where 401(h) fits.