Long-form 401(h) education.

Does a Lump Sum Pension Payout Impact Your 401(h) Account? Here's What the IRS Says

The IRS confirmed that a retiree who cashes out their pension benefit can still have retiree medical benefits paid from the plan's 401(h) account. Here's what the ruling said and why it matters.

How Are 401(h) Distributions Reported? [IRS Rules]

The reporting rules for 401(h) distributions sit in a gray area that the IRS has never formally cleaned up. Take a look at the prevailing practice.

The 25% Rule, the Dollar Cap, and the 10% Secret: The 3 Limits That Control Your 401(h)

The IRS has 3 key rules that will limit your 401(h) contributions. Getting the most out of the account means engineering all three limits in concert.

The #1 Strategy to Max Your 401(h) While Minimizing Payroll Tax

Even with conservative assumptions, the structure is remarkable: the 401(h) and cash balance plan do heavy lifting that a standalone 401(k) simply cannot do on a low W-2.

How to Maximize Your 401(h) Contributions

You probably understand the power of 401(h) accounts. Here's how to maximize your contributions, while still being IRS compliant.

Cash Balance Plan vs Money Purchase Plan: Which Plan is Better for 401(h)?

"Which host is better for a 401(h)?" is really the question "what is the medical account for?"

The 401(h) Loophole That Allows Contributions to Exceed Compensation

This 401(h) loophole can be powerful. For an owner whose wage strategy caps every other contribution type, the 401(h) medical account is an excellent tax strategy.

Why a Solo Owner's 401(h) Contribution Is Capped at the Defined Contribution Limit

For a solo business owner, the intuition that a 401(h) is "defined benefit money" and therefore uncapped by DC limits is simply false.

Can You Fund a 401(h) and HSA at the Same Time? [Surprising Answer]

It's one of the most natural questions a benefits-savvy employee can ask — and the answer turns entirely on a distinction between covering your present and funding your future.

Key Employee Medical Accounts: Understanding 415(l) Individual Accounts

Discover how 401(h) plans can offer significant tax advantages for funding retiree medical benefits for key employees through 415(l) individual medical accounts.

Funding Long-Term Care Tax-Free: The 401(h) Angle Most People Miss

Discover how a 401(h) plan can provide a tax-advantaged way to fund future medical and long-term care expenses, a strategy often overlooked by many advisors.

Understanding 401(h) Withdrawal Rules for Retiree Health

Navigate the complexities of 401(h) withdrawal rules to maximize your tax-advantaged retiree health benefits. Learn about eligible expenses, distribution methods, and key considerations.

Combining a Cash Balance Plan with a 401(h) Account: Simple Guide

Discover how combining a cash balance plan with a 401(h) account can create a powerful retirement and healthcare savings strategy for high-income earners.

Where to Report 401(h) Contributions on S-Corp Tax Returns [Form 1120-S]

Understanding where to report 401(h) contributions on your S-Corp tax return (Form 1120-S) can be tricky. This guide clarifies the correct lines and common considerations.

401(h) Qualified Medical Expenses Explained

Understand what qualifies as a medical expense under a 401(h) plan, guided by IRS Section 213(d). Learn how these plans can offer tax-advantaged healthcare savings.

401(h) Plan Administration: What an Administrator Does & Why You Need One

Understanding 401(h) plan administration is crucial for maximizing benefits. Learn why proper oversight is essential for these unique retiree health accounts.

Who Manages 401(h) Investments? How to Self-Direct

Ever wondered who calls the shots for your 401(h) retirement healthcare funds? Understanding the roles and responsibilities in managing these specialized accounts is crucial for maximizing your benefits.

When Are 401(h) Contributions Limited Under Code Section 415?

Understanding the limitations on 401(h) contributions is crucial for plan sponsors and highly compensated employees. This post clarifies how Section 415 impacts these important benefits.

401(h) Disadvantages: What You Should Know Before Set Up

While 401(h) plans offer tax-advantaged ways to save for retiree healthcare, they come with notable limitations. Understand the potential downsides before integrating one into your retirement strategy.

Can You Combine a Money Purchase Plan With a 401(k)? Here's How it Works

Discover how combining a Money Purchase Plan with a 401(k) can unlock powerful retirement savings strategies, especially for small business owners and high-income earners.

Why Money Purchase Pension Plans Declined (and Where They Still Win)

Explore the reasons behind the decline of Money Purchase Pension Plans and discover specific scenarios where they remain a powerful retirement planning tool for small businesses and high-income earners.

401(h) Contribution Limits: Maximize Your Medical Benefits

Unlock the potential of your 401(h) plan by understanding and optimizing contribution limits. Learn how to maximize these valuable medical benefits for retirement.

The Pros & Cons of 401(h) Accounts

Thinking about a 401(h) account for your business? This guide breaks down the advantages and disadvantages of these specialized health benefit plans.

Avoiding the Overfunded 401(h): Targeting Adequacy, Not Maximum Return

Learn how to properly fund your 401(h) account to provide adequate retiree health benefits without overfunding, which can lead to penalties.

401(h) Investments: The #1 Way to Effectively Manage Assets

Discover effective strategies for managing 401(h) investments to maximize their potential and ensure long-term health benefit security.

Understanding the 401(h) Deduction Limit for Money Purchase Plans

Discover how the deduction limit applies to 401(h) plans when coupled with a money purchase pension plan, ensuring your retiree health benefits are optimized.

Married to the Plan: The Lifetime Commitment of a Money Purchase 401(h)

Discover the Money Purchase 401(h), a specialized retiree medical plan often paired with defined benefit plans. Learn how it offers tax-advantaged healthcare savings for life.

The Subordination Limit in a Money Purchase 401(h): How Much Can You Actually Fund?

Understand the subordination limit and how it impacts funding your 401(h) in a money purchase plan. Learn key strategies for optimizing your contributions.

What Happens to a 401(h) Account When You Die?

Understanding the fate of a 401(h) account after the participant's passing is crucial for both account holders and their beneficiaries. This guide clarifies the distribution process and tax implications.

What Qualifies? Medical Expenses a 401(h) Can Reimburse Tax-Free

Unlock the full potential of your 401(h) plan by understanding which medical expenses qualify for tax-free reimbursement. This guide helps you navigate the rules.

Form 5500 and Annual Reporting for a 401(h) Account

Understanding your reporting obligations for a 401(h) account is crucial. This guide breaks down Form 5500 and other annual requirements.

Investing 401(h) Assets: Commingling, Earnings, and Allocation

Discover the critical rules for investing 401(h) assets, from commingling funds to managing earnings and navigating allocation strategies.

420 Qualified Transfers: Boost Retiree Health with Pension Surplus

Discover how Section 420 Qualified Transfers can strategically move surplus pension assets to fund retiree healthcare, offering significant benefits for both employers and beneficiaries.

Distributing a Life Insurance Policy at Retirement: FMV Rules for Money Purchase Plans

Life Insurance in a Money Purchase Plan: The Incidental Benefit Rules

Did you know certain retirement plans can hold life insurance? Discover how Money Purchase Plans (MPPs) can incorporate life insurance while adhering to IRS incidental benefit rules.

Why Money Purchase Plans Don't Get the Seasoning Exceptions Profit-Sharing Plans Do

Discover why Money Purchase Plans don't qualify for the same 'seasoning' exceptions that benefit Profit-Sharing Plans in retirement savings. This article explores the core differences and implications for your retirement strategy.

Forfeitures & Unused 401(h) Funds: Where Do They Go?

Unsure what happens to forfeited or unused funds in your 401(h) plan? This guide clarifies the rules and options for these often-misunderstood assets, ensuring you stay compliant.

The Complete Guide to Money Purchase Plans [+401h]

The money purchase plan was once a workhorse of retirement plan design. Today it is nearly extinct — except for one very specific reason that keeps it alive. Here is everything a business owner needs to know.

§404 Deductibility Limits When Funding a 401(h) Medical Account

Navigate the complexities of 401(h) plan contributions and their deductibility. This guide helps small business owners and high-income earners optimize their medical savings.

Can a 401(h) Really Beat an HSA, FSA, and Roth Combined?

Discover how a 401(h) plan, often overlooked, might offer a surprisingly superior way to save for healthcare in retirement compared to popular options like HSAs, FSAs, and Roth accounts.

Pairing a 401(h) With a Money Purchase Plan: Finding the Optimal Contribution Rate

Discover how combining a 401(h) with a Money Purchase Plan can create a powerful, tax-advantaged retirement and healthcare savings strategy.

The 25% (or 33%) Subordination Test for 401(h) Funding

Understanding the 25% subordination test is crucial for maximizing your 401(h) plan contributions. This guide breaks down the rules for employers and employees.

Common 401(h) Plan Mistakes to Avoid [Tips + Tricks]

A 401(h) plan can be a powerful tool for providing tax-advantaged retiree health benefits, but many common mistakes can undermine its effectiveness. Learn what to avoid.

401(h) Plan Distributions and Claims: How Retirees Get Paid

Retirees access their 401(h) benefits through a well-defined claims process, ensuring eligible expenses are reimbursed according to the plan's specific terms and conditions.

401(h) vs 401(k): The Differences Owners Actually Need to Know

While both are employer-sponsored plans, a 401(k) is a defined contribution retirement plan, whereas a 401(h) is a medical sub-account within a defined benefit pension plan. Understanding their distinct features is crucial for business owners.

401(h) Plan Design Checklist for Advisors

Advisors guiding clients through the complexities of 401(h) plans need a robust framework. This checklist helps ensure proper documentation, thoughtful design, and diligent administration of these valuable retiree health benefit sub-accounts.

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) 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) Plans for Small Business Owners: When Do They Make Sense?

401(h) plans can offer significant tax advantages for small business owners, particularly when integrated with existing defined benefit or cash balance plans. Learn if this strategy aligns with your business and financial goals.

401(h) vs 401(a): Code Sections, Vehicles, and What Each Actually Covers

Section 401(a) refers to the overarching IRS code that defines qualified retirement plans, while 401(h) is a specific sub-account within certain 401(a) plans, designed to fund retiree healthcare benefits.

401(h) Plans for CPAs: Questions to Ask Before Recommending One

For CPAs advising high-income clients, evaluating a 401(h) plan requires a thorough review. Asking the right questions upfront can ensure the recommendation aligns with the client's financial goals and regulatory compliance.

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.

401(h) Plan Tax Benefits: What Owners and CPAs Should Know

The 401(h) plan offers a uniquely attractive tax profile for funding retiree medical expenses, featuring employer deductibility, tax-deferred growth, and tax-free distributions for qualified costs. Understanding these 401(h) tax benefits is crucial for business owners and their CPAs.

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.

Cash Balance Plan vs 401(k): Side-by-Side for Owners

Cash balance and 401(k) plans serve different purposes for business owners, often used in conjunction rather than as substitutes. Understanding their unique features is key to maximizing retirement savings.

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.

How to Set Up a 401(h) Account [Step-by-Step]

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.

Who Is Eligible for 401(h) Retiree Medical Benefits?

Understanding 401(h) eligibility is crucial for accessing retiree medical benefits. This guide explores who can receive these benefits, from retired employees to owner-employees, and the key factors like plan documents and nondiscrimination rules that shape eligibility.

Defined Benefit Plan Explained: How DB Plans Work and Why Owners Use Them

A defined benefit plan outlines a promised future retirement income based on a set formula. Business owners often utilize these plans to significantly boost retirement savings and integrate specialized retiree medical benefits through a 401(h) sub-account.

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) Plans for Family Businesses: Succession, Continuity, and Retiree Medical

Family-owned businesses can leverage 401(h) plans to ensure the longevity and stability of retiree medical benefits, even across significant generational and ownership changes. Discover how a well-structured plan offers security.

401(h) Plans for Law Firms: Partners, Associates, and Plan Design

Law firms with stable profits and existing defined benefit or cash balance plans are exploring 401(h) plans to fund retiree medical benefits, navigating unique challenges related to partners and associates.

401(h) Plans for Doctors and Dentists: Why the Specialty Fits the Vehicle

Physician and dental practices are often ideal candidates for 401(h) plans due to high owner income, existing retirement plans, and a genuine need for retiree medical benefits.

401(h) Plans and ERISA: Fiduciary, Reporting, and Plan Asset Considerations

ERISA

401(h) Plan Investment Options and Considerations

401(h) assets are typically invested alongside a qualified retirement plan, requiring careful design and fiduciary oversight. Learn about the key investment options and considerations.

401(h) vs Section 115 Trust: Public-Sector Retiree Medical Funding

Public sector employers have several options for funding retiree medical benefits. This guide compares the 401(h) account and the Section 115 trust, two key frameworks for these crucial post-employment benefits.

Terminating a 401(h) Plan: What Sponsors Need to Know

Terminating a 401(h) plan involves careful consideration of legal, financial, and administrative steps. Learn what plan sponsors need to know when winding down this retiree health benefit feature.

What Is a Cash Balance Plan? A Plain-English Guide

Cash balance plans offer a unique retirement savings solution, blending the predictability of a defined benefit plan with a personalized account-like appearance. They're ideal for business owners aiming to maximize their retirement contributions.

What is a 401(h) Account? A Plain-English Guide for Business Owners [2026]

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 Fiduciary Duties: A Plain-English Overview

Understanding 401(h) plan fiduciary duties is critical for responsible management. Learn how the same stringent duties that apply to retirement assets extend to health benefit funds, and what that means for fiduciaries in practice.

Retiree Healthcare Cost Planning: Framing the Largest Unknown

Retiree healthcare can be the largest unfunded liability in retirement. Learn how to frame this challenge, understand pre-funding options, and what good planning entails.

Medicare and Employer Retiree Benefits: How They Fit Together

Medicare doesn't replace employer retiree benefits; instead, it shapes how they coordinate to provide comprehensive coverage. Understanding this coordination is crucial for maximizing your post-retirement health benefits.

Defined Benefit vs Defined Contribution: Which Type Is Your Plan?

Defined benefit and defined contribution plans offer distinct approaches to retirement savings, impacting funding, risk, and benefit structure. Understanding the core differences is crucial for sponsors and participants alike.

401(h) Plan Spouse and Dependent Coverage: How It Works

401(h) plans can be a powerful tool for funding retiree healthcare, and understanding how they extend to spouses and dependents is crucial. This article explains the key considerations for 401(h) spouse coverage.

401(h) and the Plan Restatement Cycle: Staying Current

Understanding the 401(h) plan restatement cycle is crucial for compliance. Learn how these health benefit provisions integrate with your main plan document and why staying current prevents costly issues.

Can a 401(h) Plan Pay for Long-Term Care?

Explore if your 401(h) plan can cover long-term care costs, including qualified LTC insurance premiums and custodial care. Understand the crucial role of plan documents and tax regulations.

Can 401(h) Plans Pay Medicare Premiums?

While 401(h) plans can cover medical expenses, whether they cover Medicare premiums hinges on specific plan design and applicable laws. Understand how your 401(h) plan addresses these vital healthcare costs.

401(h) Plan FAQ: 25 Questions Answered

Explore 25 common questions about 401(h) plans, designed for business owners, CPAs, and financial advisors. Get clear answers on how these unique retiree health benefit accounts work.

Can a Cash Balance Plan Include a 401(h) Account?

Cash balance plans, while appearing like individual accounts, are classified as defined benefit plans under IRS rules. This crucial distinction allows them to incorporate a 401(h) sub-account for tax-advantaged retiree health benefits.

401(h) Plan Actuarial Valuation: What the Actuary Actually Does

A 401(h) plan actuarial valuation is essential for maintaining the financial health and regulatory compliance of your retiree health benefit plan. Discover what actuaries do to keep these plans on track.

401(h) Plans and Form 5500: What Gets Reported and Where

A 401(h) account doesn't file a separate Form 5500. Instead, its information is integrated into the underlying qualified retirement plan's annual filing. Learn how 401(h) details typically appear on Form 5500.

How Cash Balance Plans Work: Pay Credits, Interest Credits, and Funding

Cash balance plans utilize pay credits and interest credits to define hypothetical account growth, while actuarial funding ensures the trust can cover projected benefits. Understand the mechanics simply.

401(h) vs VEBA: Which Retiree Medical Vehicle Fits?

Explore the differences between 401(h) accounts and VEBA trusts for pre-funding retiree medical benefits, and determine which strategy best aligns with your plan ecosystem and funding objectives.

401(h) Account Funding Strategies: How Money Gets In

Understanding the various strategies for funding a 401(h) account is crucial for plan sponsors looking to optimize their retiree health benefits. This guide explores the actuarial underpinnings and practical approaches to contributing to these valuable sub-accounts.

Tax-Deductible Employer Retirement Contributions: The Big Picture

Unlock the full potential of your business's retirement planning with tax-deductible employer contributions. This guide explores the foundational principles, limits, and strategic advantages of qualified plans, including the unique role of 401(h) accounts for healthcare benefits.