31A-32a-105 - Withdrawals -- Termination -- Transfers.
31A-32a-105. Withdrawals -- Termination -- Transfers.
(1) Subject to Subsection (3), if the employee or account holder withdraws money forany purpose other than a medical expense at any time in which the balance in the account isbelow $4,000:
(a) the amount of the withdrawal shall be added to adjusted gross income in accordancewith Section 59-10-114; and
(b) the administrator shall withhold from the amount of the withdrawal, and on behalf ofthe employee or account holder shall pay a penalty to the State Tax Commission equal to 10% ofthe amount of the withdrawal.
(2) If an employee or account holder withdraws money from the employee's or accountholder's medical care savings account for any purpose other than a medical expense, but thewithdrawal occurs when the balance in the medical care savings account is over $4,000, and thewithdrawal will not result in the account balance dropping below $4,000, the amount of thewithdrawal:
(a) is not subject to the penalties described in Subsection (1)(b); and
(b) shall be added to adjusted gross income in accordance with Section 59-10-114.
(3) The amount of a disbursement of any assets of a medical care savings accountpursuant to a filing for protection under 11 U.S.C. Sec. 101 to 1330, by an employee, accountholder, or person for whose benefit the account was established:
(a) is not considered a withdrawal for purposes of this section; and
(b) shall be added to adjusted gross income in accordance with Section 59-10-114.
(4) (a) Upon the death of the employee or account holder, the account administrator shalldistribute the principal and accumulated interest of the medical care savings account to the estateof the employee or account holder.
(b) A distribution under this Subsection (4) is not subject to the penalties described inSubsection (1)(b).
(5) (a) If an employee is no longer employed by an employer that participates in amedical care savings account program, and if the employee's account is administered by theemployer's account administrator, the money in the medical care savings account may be used forthe benefit of the employee or the employee's dependents in accordance with this chapter, andmay not be added to adjusted gross income under Section 59-10-114 if the employee, not morethan 60 days after the employee's final day of employment:
(i) transfers the account to a new account administrator; or
(ii) (A) requests in writing to the former employer's account administrator that theaccount remain with that administrator; and
(B) the account administrator agrees to retain the account.
(b) Not more than 30 days after the expiration of the 60 days described in Subsection(5)(a), if an account administrator has not accepted the former employee's account, the employershall mail a check to the former employee at the employee's last-known address equal to theamount in the account on that day.
(c) The amount mailed to the employee under Subsection (5)(b) shall be added toadjusted gross income in accordance with Section 59-10-114, but is not subject to the penaltiesunder Subsection (1)(b).
(d) If an employee becomes employed with a different employer that participates in amedical care savings account program, the employee may transfer the employee's medical care
savings account to that new employer's account administrator.
(e) If an account holder becomes an employee of an employer that participates in amedical care savings account program, the account holder may transfer the account holder'saccount to the employer's account administrator.
Amended by Chapter 389, 2008 General Session