Medical Savings Account (MSA) Distributions
For information on Arizona's MSA provisions, see the department's MSA brochure, Pub 542.
You must add amounts received from an MSA here if any of the following apply.
- You withdrew funds From your MSA for other than qualified expenses you must make an entry here if all of the following apply.
- You withdrew money from your MSA
- You did not use the amount withdrawn to pay qualified medical expenses.
- You did not have to include the withdrawal as income on your federal income tax return.
Enter the amount withdrawn.
- Deceased Account Holder Where the Named Beneficiary is Not the Decedent's Surviving Spouse
You must make an entry here if all of the following apply.
- The account holder died during the year.
- You are the named beneficiary of the decedent's MSA.
- You are not the decedent's surviving spouse.
- You did not have to include the value of the MSA as income on your federal income tax return.
In this case, the MSA ceased to be an MSA. Enter the fair market value of the MSA as of the date of death, less the amount of MSA funds used within one year of the date of death, to pay the decedent's qualified medical expenses. You can reduce the fair market value by only those expenses paid from the MSA. If you pay additional medical expenses for the decedent from the MSA after you file, you may file an amended return to further reduce the fair market value of the MSA.
- Decedent's Final Return And No Named MSA Beneficiary
Make an entry here if all of the following apply.
- The account holder died during the year.
- There is no named MSA beneficiary.
- This is the decedent's final return.
- The value of the MSA did not have to be included on the decedent's final federal income tax return.
In this case, the MSA ceases to be an MSA. Enter the fair market value of the MSA as of the date of death. This rule applies in all cases in which there is no named beneficiary, even if the surviving spouse ultimately obtains the right to the MSA assets.
NOTE: The following are not withdrawals. Do not enter any of the following:
- Amounts from the MSA used to pay qualified medical expenses
- A qualified return of excess contributions
- A qualified rollover
- The fair market value of an MSA received by a surviving spouse who was the deceased account holder's named beneficiary
For more information about the above items, see the department's MSA brochure, Pub 542.