Online Banking

Personal Savings Accounts

At Anchor Bank, we work hard to deliver the personal attention that you should expect from a bank. 

Savings Accounts

 

 

Looking for an easy way to
save?

OUR BASIC SAVINGS
ACCOUNT IS OUR MOST
POPULAR CHOICE.

Need a convenient account
for your money while it
earns interest?

CONSIDER ANCHOR
SAVINGS.

Looking for a high yield money
market account with the
option to write checks? 

MONEY MARKET SAVINGS IS DESIGNED JUST FOR YOU.

  BASIC SAVINGS ANCHOR SAVINGS PERSONAL MONEY
MARKET SAVINGS
Earns Interest1 $50 + $0 - $4,999.99
$5,000 +
$0 - $9,999.99
$10,000 - $49,999.99
$50,000 - $74,999.99
$75,000 +
Balance Requirement $50 average collected $300 minimum $10,000 minimum
Monthly Service Fee If Balance Requirement
Is Not Met4
$5.00 $6.004 $15.00
Withdrawal Fee After First 6 per Month $13.00 $13.00 $13.00
ATM fees at Non-MoneyPass ATMs3 $2.50 $2.50 $2.50
Overdraft Protection Transfers to Checking2 $11.00 per transfer $11.00 per transfer $11.00 per transfer
SPECIAL FEATURES
Free eStatement X X X
Free Online Banking X X X
Free Mobile Banking5 X X X
Free Account Alerts X X X
Free Access at All MoneyPass® ATMs X X X
Check Access2     X

 

1 Variable interest earned on the daily collected balance and paid quarterly on Basic Savings and Anchor Savings and paid monthly on Personal Money Market Savings. For current rate information on our interest bearing savings accounts, please contact a banker at one of our locations.
2 Transfers from a Basic Savings, Anchor Savings or Personal Money Market Savings account to another account or to third parties by preauthorized, automatic, telephone or computer transfer or by check, draft, debit card or similar order to third parties are limited to six per calendar month.
3 Does not include any applicable ATM fees charged by ATM owner.
4 Monthly service fee waived on Anchor Savings for our customers under age 18.
5 Your mobile carrier may charge access fees depending upon your individual plan.

 

Safe Deposit Box

With Safe Deposit Boxes from Anchor Bank, you can rest assured knowing that your valuable possessions are in a secure location. We offer varying sizes to suit the many needs of our customers.

Size Price*
2" x 5" $34.00
3" x 5" $38.00
4" x 5" $48.00
5" x 5" $57.00
5" x 8" $63.00
3" x 10" $67.00
5" x 10" $88.00
10" x 10" $175.00
10.5" x 11" $185.00
10" x 15" $200.00

 

*Prices are per year and reduced $5.00 when payments are automatically debited from an Anchor Bank account. Prices are doubled for customers who do not have a deposit or loan account with Anchor Bank. Sizes vary by location.

IRA - Individual Retirement Account

 

Am I eligible to have a traditional IRA?
If you are younger than age 70½ for the entire tax year, and have compensation, you are eligible to establish and make an annual tax-year contribution to a traditional IRA, even if you already participate in certain government plans, a tax-sheltered annuity, a simplified employee pension (SEP) plan, a Savings Incentive Match Plan for Employees of Small Employers (SIMPLE), or a qualified pension or profit-sharing plan established by an employer.

What is compensation?
Compensation is the salary or wages you receive as an employee. If you are self-employed, compensation is your net income for personal services performed for the business. All taxable alimony is considered compensation. Interest, dividends, and most rental income are passive income sources and are not considered compensation.

How much can I contribute to my IRA?
You may contribute any amount up to 100 percent of your compensation or the amount set forth in the chart below, whichever is less, to a traditional IRA (or aggregated between a traditional and a Roth IRA). Additionally, if you have attained age 50 or older by the end of your taxable year, you are eligible to make catch-up contributions.

Contribution Limits

Tax Year Single Contribution Limit   Catch-Up Limit   Total Limit for Age 50 and Over
2016 $5,500 $1,000 $6,500
2017 $5,500 $1,000 $6,500
2018 & later years $5,500 +COLA* $1,000 $6,500 +COLA*

*Subject to annual cost-of-living adjustments (COLAs), if any.

The amount of any tax refund contributed directly to your IRA is subject to the annual contribution limit.

Do I pay taxes on the earnings of my IRA?
All earnings on your IRA contributions (deductible and/or nondeductible) remain tax deferred until you make withdrawals from the IRA.

Do I get a tax deduction for my contribution?
Deductibility of your contribution is based on whether you and/or your spouse, if married, are an active participant in an employer-sponsored retirement plan. If you are an active participant, the deductible amount is dependent on modified adjusted gross income (MAGI) and income tax filing status. You may be eligible for the maximum deduction, a partial deduction, or no deduction. Your tax or legal professional can help you determine your actual deduction.

Basic rules for determining IRA deductibility
If you are single and are not an active participant in an employer-sponsored retirement plan, or are married and neither you nor your spouse are active participants, you are eligible for a full deduction, no matter how large your income.

If both you and your spouse are active participants, if you are single and an active participant, or if you are not an active participant but your spouse is, you may be eligible for either a full or partial deduction depending on your MAGI.

See your tax or legal professional for assistance in determining IRA deductibility.

What if I’m not eligible for a deductible IRA contribution?
You can still make nondeductible contributions to your IRA. You may also be eligible for a Roth IRA.

How are the assets taxed at distribution?
You must include the taxable portion of the amount withdrawn as income on your tax return. If you are younger than age 59½, and do not meet one of the exceptions, you must also pay a 10 percent penalty tax for early distribution. The portion of a distribution attributable to nondeductible IRA contributions or rollovers of after-tax assets is not taxable when withdrawn, nor is it subject to the 10 percent early distribution penalty tax. 

If certain requirements are met, you may take a once-in-a-lifetime tax-free IRA distribution to fund your Health Savings Account (HSA) tax-year contribution. We recommend consulting your tax or legal professional to make sure this qualified HSA funding distribution is the right financial decision for you.

When can I withdraw assets from my IRA without incurring any penalties?
You can withdraw assets from your IRA without a 10 percent early distribution penalty tax any time after you reach age 59½. You can also avoid the early distribution penalty tax before age 59½ if you become disabled, if the distributions are part of certain periodic payments, for medical expenses in excess of 7.5 percent of your adjusted gross income, for health insurance premiums if you have been receiving unemployment compensation for at least 12 weeks, for distributions paid directly to the IRS due to IRS levy, for qualified reservist distributions, for eligible higher education expenses, or for a first-time home purchase. When you reach age 70½, you must begin to take required minimum distributions or severe tax penalties will apply.

What happens to my IRA in the event of my death?
Your named beneficiary(ies) will receive the entire proceeds of the IRA. Your beneficiary(ies) will not be subject to the 10 percent early distribution penalty tax. Distributions to your beneficiary(ies) will be made in accordance with the required minimum distribution rules and your IRA agreement.

What is a spousal IRA?
A married individual can take advantage of a unique IRA contribution rule if he/she has little or no compensation, allowing him/her to make a regular IRA contribution. A married couple must meet two conditions for one spouse to take advantage of the spousal rules. First, the married couple must file a joint federal income tax return. Second, the compensation of the individual benefiting from the spousal rules must be less than the compensation of his/her spouse. A married couple can contribute up to 100 percent of their combined compensation or the contribution limit, whichever is less. The amounts can be divided in any manner between the two spouses’ IRAs with no more than the annual limit being contributed to either spouse’s IRA. Catch-up contributions are available for spouses age 50 or older and increase the allowable contribution limit.

How do I move assets from one IRA to another?
There are two methods you can use to move assets from one IRA to another: rollover and transfer. For a rollover, you have 60 calendar days following the date of receipt to roll over the distribution to another IRA. Rollovers from IRAs may not occur more than once during a 12-month period (this rule applies to each separate IRA you own). A transfer occurs when the assets are moved from one IRA to another IRA without you having control or custody of the assets. Checks issued to the new custodian/trustee may be delivered by you if the custodian/trustee agrees. Unlike rollovers, there are no time limits or frequency limits on the number of transfers permitted.

How do I move assets from an employer-sponsored retirement plan (ERP), to a traditional IRA?
An eligible rollover distribution from one of these plans may be rolled over or directly rolled over to an IRA. Generally, an eligible rollover distribution is any distribution except one that is (1) part of a series of substantially equal periodic payments over your single life expectancy or joint life expectancy of you and your beneficiary or for a specified period of ten years or more, (2) a required minimum distribution for an employee age 70½ or older, or (3) any hardship distribution.

An indirect rollover occurs when assets distributed from your ERP are paid directly to you, then subsequently rolled over by you to a traditional IRA within 60 calendar days.

A direct rollover occurs when assets distributed from your ERP are made payable to the IRA custodian/trustee for the benefit of your traditional IRA.

Taxable ERP distributions paid to you, that are eligible for rollover, are subject to a mandatory 20 percent federal income tax withholding at the time of distribution. Assets moved to an IRA via a direct rollover are not subject to withholding.

As with an IRA-to-IRA rollover, an ERP plan recipient has 60 calendar days following the date of receipt to roll over any portion of the distribution to an IRA. The one rollover per 1-year limitation does not apply to direct or indirect rollovers from an ERP to an IRA.

Is there a contribution deadline for funding an IRA?
IRA contributions for a taxable year can be funded any time between the first day of a tax year and the date a tax return is due for that year, excluding extensions. For most taxpayers, this due date is April 15 of the following year. If the due date falls on a Saturday, Sunday, or legal holiday, the IRA contribution deadline is the next business day.

The deadline may be extended in some situations. Examples include a federally declared disaster, a terroristic or military action, or service in a combat zone.

Are there other tax advantages to establishing an IRA?
A unique saver’s tax credit is available for lower income taxpayers who contribute to an IRA and/or an employer’s salary deferral plan. See your tax or legal professional for more information.

How do I open an IRA?
See any of our bankers. We can help explain the nature of these accounts in more detail and help you complete the forms necessary to establish your IRA.
 

This webpage is intended to provide general information concerning federal tax laws governing traditional IRAs. It is not intended to provide recommendations, legal advice, or to be a detailed explanation of the rules or how such rules may apply to your individual circumstances. For specific information, you are encouraged to consult your tax or legal professional. IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs), IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs), and the IRS’s web site, www.irs.gov, may also provide helpful information. Wolters Kluwer Financial Services © 2016

Roth IRA

A Roth IRA is an individual retirement account .The term “tax-free” means free from federal income taxes where regular contributions are not tax deductible, but distributions of these contributions are tax free. Under certain conditions, the earnings on Roth IRA contributions are also tax free when distributed.
Am I eligible for a Roth IRA?
There are two requirements for eligibility to make regular contributions to a Roth IRA: you must have compensation (or your spouse must have compensation) and your modified adjusted gross income (MAGI) for any tax year cannot exceed certain prescribed limits. These limits are subject to annual cost-of-living adjustments (COLAs), if any.

 

2016 MAGI Limits

Modified AGI (MAGI) Single Married, filing jointly Married, filing separately
Less than $10,000 Full Contribution Full Contribution Phaseout
$10,000 - $117,000 Full Contribution Full Contribution No Contribution
$117,001 - $131,999 Phaseout Full Contribution No Contribution
$132,000 - $184,000 No Contribution Full Contribution No Contribution
$184,001 - $193,999 No Contribution Phaseout No Contribution
$194,000 or over No Contribution No Contribution No Contribution

 *If you are married, filing separately, and lived apart from your spouse the entire year, you can use the MAGI limit for a single filer to determine your contribution limit.
 

2017 MAGI Limits

Modified AGI (MAGI) Single Married, filing jointly Married, filing separately
Less than $10,000 Full Contribution Full Contribution Phaseout
$10,000 - $118,000 Full Contribution Full Contribution No Contribution
$118,001 - $132,999 Phaseout Full Contribution No Contribution
$133,000 - $186,000 No Contribution Full Contribution No Contribution
$186,001 - $195,999 No Contribution Phaseout No Contribution
$196,000 or over No Contribution No Contribution No Contribution

 *If you are married, filing separately, and lived apart from your spouse the entire year, you can use the MAGI limit for a single filer to determine your contribution limit.

How much can I contribute each year?
You may contribute any amount up to 100 percent of your compensation or the contribution limit set forth in the chart that follows, whichever is less, aggregated between a traditional and a Roth IRA. Additionally, if you have attained age 50 or older by the end of your taxable year, you are eligible to make catch-up contributions.

CONTRIBUTION LIMITS

Tax Year Contribution Limit Catch-up Limit Total Limit for age 50 and over
2016 $5,500 $1,000 $6,500
2017 $5,500 $1,000 $6,500
2018
and later years
$5,500+COLA* $1,000 $6,500+COLA*

*Subject to annual cost-of-living adjustments (COLAs), if any. 

What is the contribution deadline for funding a Roth IRA?
For a given taxable year, you can open and fund a Roth IRA any time between January 1 and the date your tax return is due for the year, excluding extensions. For most taxpayers, this is April 15 of the following year. The deadline may be extended in some situations. Examples include a federally declared disaster, a terroristic or military action, or service in a combat zone.

What assets (including SEP) and SIMPLE IRA can I move to a Roth IRA?

  • Traditional – Traditional and SIMPLE IRA assets may be converted to a Roth IRA. The distribution is subject to income tax, but is not subject to the 10 percent early-distribution penalty tax. You can roll over traditional (including SEP) IRA assets to a SIMPLE IRA two years following the date of the first contribution made to the SIMPLE IRA.
  • Employer Plan – Eligible assets from an employer plan may be rolled over indirectly or directly rolled over to a Roth IRA. The taxable portion of the rolled over amount is subject to federal income tax.
  • Designated Roth Account – Assets in a designated Roth account that are part of an Internal Revenue Code Section 401(a), 403(b), or governmental 457(b) plan may be indirectly or directly rolled over to a Roth IRA and are not subject to income tax.


What if I need access to my money now?
A helpful feature of the Roth IRA is that, for distributions, regular contribution amounts are returned first without tax or penalty. Converted assets and rollovers from employer plans are returned next. The converted and employer plan rollover assets are returned tax free; however, they may be subject to the 10% early-distribution penalty tax. Earnings are returned last. Earnings may be subject to tax and penalty.

Do I pay taxes on my earnings?
No, provided you take the earnings as part of a qualified distribution. That’s the best part of the Roth IRA. Unlike a traditional IRA, you cannot take a tax deduction for any of the contributions that you make to a Roth IRA. However, when you are ready to make a withdrawal, you may not pay taxes on any of the earnings that your contributions have generated.

What is a qualified distribution?
In order for earnings to be tax free, you must first meet a five-year holding period for your Roth IRA. This period begins with the tax year for which your first contribution is made. After that, any earnings you withdraw for a qualified distribution reason are income tax free and penalty tax-free. Qualified distributions are:

  • Distributions made on or after the date on which you attain age 59 ½,
  • Distributions made to your beneficiary (or your estate) upon your death,
  • Distributions attributable to you being disabled, and
  • Qualified first-time homebuyer distributions (up to $10,000).


Does the 10 percent early-distribution penalty tax apply if I withdraw my money?
Distributions of earnings not taken as a qualified distribution, or for one of the reasons listed below, are subject to both taxes and a 10 percent early-distribution penalty tax.

Distributions of assets converted from an IRA or assets rolled over from an employer plan that are not taken as a qualified distribution, after the five-year holding period has been met, or for one of the reasons listed below, are subject to the 10 percent early-distribution penalty tax.

  • Substantially equal periodic payments,
  • Qualified reservist distributions,
  • Eligible medical expenses in excess of 10 percent of your adjusted gross income (AGI),
  • Health insurance premiums for eligible unemployed individuals,
  • Qualified higher education expenses,
  • Distributions taken within the first five years for any of these reasons: age 59 ½, death, disability, or first-time home purchase, and
  • Distributions paid directly to the IRS due to IRS levy.


When do I have to start taking distributions from my Roth IRA?
You never have to take distributions from your Roth IRA. That’s another advantage of the Roth IRA over the traditional IRA. Assets held in a Roth IRA are not subject to age 70 ½ required minimum distributions.

What happens in the event of my death?
Your named beneficiary(ies) will receive the rights to the balance in your Roth IRA. Distributions to the beneficiary(ies) will be made in accordance with the required minimum distribution rules and your Roth IRA agreement.

How do I open a Roth IRA?
See any of our IRA representatives. We will explain the nature of these accounts in more detail, and help you complete the forms necessary to establish your Roth IRA.

Find an IRA representative in your area



This information is intended to provide general information on federal tax laws governing Roth IRAs. It is not intended to provide recommendations, legal advice, or to be a detailed explanation of the rules or how such rules may apply to your individual circumstances. For specific information, you are encouraged to consult your tax or legal professional. IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs), IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs), and the IRS’s web site, www.irs.gov, may also provide helpful information. Wolters Kluwer Financial Services © 2016.

HSA - Health Savings Account

A Health Savings Account (HSA) is a tax-exempt trust or custodial account established for the purpose of paying or reimbursing qualified medical expenses of you, your spouse, and your dependents. Contributions to an HSA are tax deductible, the earnings grow tax deferred, and distributions to pay or reimburse qualified medical expenses are tax free.

Anchor Bank HSA

  • No monthly fee if one of the balance requirements is met which is either an average ledger balance of  $2,500 in total deposits or $5,000 minimum balance in total loans; or you are employed by an Anchor Bank business customer.
  • A $5 monthly service fee will be charged if none of the stated requirements are met.
  • Variable interest earned on the daily collected balances and paid monthly based on the following tiers2:
    • $0 - $4,999.99
    • $5,000 +
  • The monthly statement fee is $0 for an online or printed statement or $6.00 for an image statement.3
  • No monthly fee on Health Savings Account Debit card.4

Contact an account representative in your area for more information

What are my responsibilities as an HSA owner?
Each year you are responsible for determining your eligibility and allowable annual HSA contribution and whether you have qualified medical expenses eligible for reimbursement with nontaxable HSA distributions. You are encouraged to seek guidance from a tax or legal professional.

How do I establish an HSA?
If you are eligible, you can establish an HSA in much the same way you would establish an IRA. See any of our bankers. We will explain the nature of these accounts in more detail and help you complete the forms necessary to establish an HSA.

Am I eligible for an HSA?
You are an eligible individual and may make regular HSA contributions if you are covered under a qualifying high deductible health plan (HDHP) and answer “No” to each of the following questions:

  1. Do you have other health coverage (except permitted coverage)?
  2. Are you enrolled in Medicare?
  3. Are you claimed as a dependent on another person's tax return?

What is an HDHP?
An HDHP is a high-deductible plan with an annual deductible no less than the amounts shown in the chart that follows.
 

HDHP Annual Deductible

Tax Year Self-Only Coverage Family Coverage
2016 $1,300 $2,600
2017 $1,300 $2,600
2018 and later $1,300* $2,600*

*Subject to annual cost-of-living adjustments.

Contact your health plan provider for assistance in determining if your HDHP meets the requirements for an HSA.

Are there other requirements for the HDHP?
Yes. For HSA purposes, the HDHP must limit out-of-pocket expenses to no more than the amount shown in the chart that follows.
 

Maximum out-of-pocket expenses

Tax Year Self-Only Coverage Family Coverage
2016 $6,550 $13,100
2017 $6,550 $13,100
2018 and later $6,550* $13,100*

*Subject to annual cost-of-living adjustments.

Can I have an HSA and participate in a health flexible spending account (FSA)?
One of the general rules for HSA eligibility is that if you are covered under another health plan that is not an HDHP, you are not an eligible individual and you cannot make regular contributions to an HSA. A health FSA is considered a non-HDHP because you can use the assets in the FSA before you have met your deductible in the HDHP. However, if you have a limited purpose or post-deductible FSA, and are otherwise eligible, you can make regular contributions to your HSA.

Who can contribute to my HSA?
If you meet the eligibility requirements for an HSA, you, your employer, your family members, and any other person (including nonindividuals) may contribute to your HSA. This is true whether you are self-employed or unemployed.

How much can I contribute to my HSA?
The maximum annual contribution amount is the standard limit as shown in the chart that follows. It is reduced by any employer contributions to your HSA, any contributions made to your Archer MSA, and any qualified HSA funding distributions from your IRA to your HSA.

Additionally, “catch-up” contributions are available for eligible individuals who are age 55 or older by the end of their taxable year and for any months individuals are not enrolled in Medicare.

Note: Any transfer from a checking, savings,or other type of deposit account is considered a regular contribution into your HSA and is applied to your maximum annual contribution limit.

Contribution Limits

Tax Year HDHP Coverage Standard Limit Catch-up Limit Maximum Contribution Limit
2016 Self-Only $3,350 $1,000 $4,350
  Family $6,750 $1,000 $7,750
2017 Self-Only $3,400 $1,000 $4,400
  Family $6,750 $1,000 $7,750
2018 and later Self-Only $3,400* $1,000 $4,400*
  Family $6,750* $1,000 $7,750*

 *Subject to annual cost-of-living adjustments.

Examples
Joann, age 38, has family HDHP coverage. Assuming she remains eligible for all of 2017, her contribution limit is $6,750. The standard and catch-up contribution amounts are determined on a monthly basis and are zero for any months an individual is not eligible.

Al reached age 65 and enrolled in Medicare during July 2017. He had been participating in an HDHP with self-only coverage. Al is no longer an eligible individual for the months after June 2017. Al's contribution limit for 2017 is $2,200 [his regular contribution limit of $3,400 plus the catch-up contribution limit of $1,000, multiplied by the number of months he was eligible (6 —January through June), then divided by 12].

Mark, age 52, has self-only HDHP coverage. Mark's 2017 monthly contribution limit is $283.33 ($3,400 ÷ 12). However, Mark changed jobs in the middle of the year and his HDHP coverage ended June 15, 2017. Mark has a zero contribution limit for any month he is not an eligible individual on the first day of the month. Therefore, he may contribute to an HSA only for January through June. Mark's total contribution limit for 2017 is $1,700 ($3,400 x 6 ÷ 12).

For married individuals with family HDHP coverage the standard contribution limit can be split between their HSAs in any manner.

Example
Jason, age 53, has family HDHP coverage. His spouse, Kathy, age 55, is covered under the HDHP plan. Both are eligible individuals the entire year. Having no other health insurance coverage, Jason and Kathy are each eligible to establish and fund an HSA for 2017. Between the two of them, they can contribute a total of $6,750 to HSAs. However, the additional $1,000 catch-up contribution that Kathy is eligible for can only be made to Kathy's HSA, even if they decide to make the entire $6,750 contribution to Jason’s HSA.

How does the last month rule work?
You are eligible to make HSA contributions for a full year if you are an eligible individual on December 1 of that year. If you were not eligible for the entire year, but were an eligible individual on December 1, you must remain an eligible individual for a testing period that begins December 1 of the contribution tax year and ends on December 31 of the following year to take advantage of the last month rule.

Failure to remain an eligible individual for the entire testing period will make the contribution amount for the months you were ineligible subject to income tax and a 10 percent penalty tax during the year the failure occurs, regardless of age. However, no income tax or penalty tax applies if loss of eligibility is due to death or disability. Failure of the testing period does not create an excess contribution in the HSA. Rather, the assets remain in the HSA, and may be subject to taxation again if withdrawn and not used for qualified medical expenses.

Example
John, age 43, is an eligible individual and has self-only coverage under an HDHP beginning July 1, 2017. John contributes the full amount for 2017 ($3,400) under the last month rule, as if he had been eligible for the entire year. His contribution limit testing period begins December 1, 2017, and ends December 31, 2018. If John loses his eligible individual status at any time during the testing period, $1,700 [$3,400 annual contribution x 6 months of ineligibility in 2017 (January through June) ÷ 12 months per year] is subject to federal income tax and a 10 percent penalty tax during the year (likely 2018) the failure occurs.

Can I move money from my IRA to my HSA?
You may take a one-time (once-in-a-lifetime) distribution from your traditional or Roth IRA to fund an HSA. This HSA contribution is considered a regular, current-year contribution and, therefore, cannot exceed your contribution limit for the year. The IRA assets must be transferred directly from your traditional or Roth IRA to your HSA, or from a traditional or Roth IRA for which you are the beneficiary to your HSA. In other words, a qualified HSA funding distribution cannot be made to an HSA owned by someone other than you, including your spouse. If you own more than one IRA and want to use amounts in multiple IRAs to make a qualified HSA funding distribution, you must first transfer assets to a single IRA and then make the onetime qualified HSA funding distribution. The qualified HSA funding distribution provisions do not apply to distributions from ongoing SEP or SIMPLE IRAs. Distributions from ongoing SEP or SIMPLE IRAs are not eligible for qualified HSA funding distribution provisions.

The testing period begins with the month of the contribution to the HSA and ends on the last day of the twelfth month following such month. Failure to remain an eligible individual for the entire testing period subjects the IRA-funded amount to income tax and a 10 percent penalty tax in the tax year you become ineligible. However, no income tax or penalty tax applies if loss of eligibility is due to death or disability. Failure of the testing period does not create an excess contribution in the HSA. Rather, the assets remain in the HSA, and may be subject to taxation again if withdrawn and not used for qualified medical expenses.

Example
Harold, age 58, has family HDHP coverage and a $7,750 HSA contribution limit for 2017. On June 1, 2017, Harold funded his HSA with a $5,000 tax-free distribution from his traditional IRA. The testing period begins June 1, 2017, and ends June 30, 2018. If Harold loses his eligible individual status in February 2018, the IRA distribution amount will be subject to income tax and a 10 percent penalty tax in 2018.

How do I factor in contributions made by my employer?
Aggregate employer contributions to an HSA reduce the amount you may contribute to your HSA. You are fully responsible for tracking the amount of your annual contributions including those made by your employer or any other third party.

Example
Mary, age 32, has self-only HDHP coverage and a $3,400 HSA contribution limit for 2017. Mary's employer made a $1,000 contribution to her HSA for 2017. Because of that, she may contribute only $2,400 to her HSA for 2017 ($3,400 - $1,000).

What happens if I change insurance coverage during the year?
If you change your health insurance coverage during the year, your contribution limit is based on the greater of:

  • The total pro-rata contribution amounts as determined by the period of time you are covered under a self only HDHP and under a family HDHP, or
  • The maximum annual HSA contribution based on your HDHP coverage (self-only or family) on the first day of the last month (December 1) under the last month rule guidelines.

What is an excess or ineligible contribution?
An excess contribution results if you exceed your maximum allowable amount for a tax year.

An excess contribution includes ineligible contributions such as a rollover contribution to an HSA that includes assets not eligible for rollover.

If your HSA contains an excess or ineligible contribution you will generally owe the Internal Revenue Service (IRS) a 6 percent excess-contribution penalty tax for each year the excess contribution remains in your HSA uncorrected at the end of the tax year. The tax is paid using IRS Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts.

You may not remove an unwanted HSA contribution as an excess contribution.

How do I remove an excess or ineligible contribution?
There are two ways for you to correct an excess or ineligible contribution—by removal or by applying it in a later year. An excess contribution removal will not be subject to income taxes or the 6 percent penalty tax if:

  • No deduction is allowed for the contribution under Internal Revenue Code (IRC) Section 223,
  • The distribution includes any net income attributable to the excess contribution, and
  • You take the distribution by the due date (plus extensions) of your federal income tax return for the tax year of the contribution.

The net income attributable is taxable in the tax year of the distribution.

Example
Ray, age 52, contributed $7,750 to his HSA for 2017 on November 12, 2017. He filed his 2017 federal income tax return on April 15, 2018, deducting a $7,750 contribution, not realizing that he exceeded his maximum allowable limit for 2017 by $1,000.

Ray realizes his error after receiving his Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, from his HSA custodian in May of 2018. Ray withdraws $1,025 on June 10, 2018, after he and his HSA custodian determine the net income attributable to be $25. The $1,000 is not taxable, but the $25 is taxable on Ray's 2018 federal income tax return.

Even though Ray had already filed his tax return, he is able to correct his excess by distribution, plus net income attributable, as late as October 15, 2018. He will have to amend his 2017 federal income tax return to change his deduction. He includes the $25 as "Other income" on his 2018 federal income tax return.

Your HSA custodian/trustee reports to the IRS the HSA contribution as originally made even if it results in an excess contribution that is later returned to you. It reports the return of any HSA contribution as an excess contribution along with the amount of earnings as a distribution.

When is the contribution deadline for funding an HSA?
The deadline for regular (including catch-up) HSA contributions is your federal income tax return due date, excluding extensions, for that taxable year. The due date for most taxpayers is April 15.

May I claim a federal tax deduction for my HSA contribution?
You may deduct contributions made by anyone other than your employer as long as they do not exceed the maximum annual contribution limit. Employer contributions are not wages for federal income tax purposes. Rollover and transfer contributions from HSAs, IRAs, and Archer medical savings accounts are not tax deductible. IRS Form 8889, Health Savings Accounts (HSAs), is used to figure your HSA deduction and is filed with your tax return.

When can I take distributions from my HSA?
You may take a distribution from your HSA at any time—even if you are not currently eligible to have contributions made to your HSA. HSA distributions used exclusively to pay for or reimburse qualified medical expenses incurred by you, your spouse, or your dependents are not included in your gross income for the year of the distribution. Any other distributions are included in income unless rolled over. Distributions not used to pay for or reimburse qualified medical expenses or that are not rolled over are subject to an additional 20 percent tax unless made after your death, your disability, or your attainment of age 65.

What is a qualified medical expense?
Qualified medical expenses include amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease that affects any structure or function of the body, and amounts paid for prescription drugs and insulin.

This includes items that are not medicines or drugs, including equipment such as crutches, supplies such as bandages, and diagnostic devices such as blood sugar test kits. This also includes transportation costs associated with this medical care and certain qualified long-term care services.

Qualified medical expenses also include otherwise eligible amounts paid for your child who is claimed as a dependent by your former spouse.

To be paid or reimbursed tax free a qualified medical expense must be incurred after your HSA is established.

Note: You are solely responsible for determining if you have a qualified medical expense. Consult your tax or legal professional and review IRS Publication 502, Medical and Dental Expenses, or Schedule A (Form 1040), Itemized Deductions, for a list of qualified medical expenses.

Is a distribution for non-prescription drugs a qualified medical expense?
A drug or medicine (other than insulin) must be prescribed to be considered a qualified medical expense for HSA purposes. The prescription requirement does not apply to the reimbursement of drug or medicine expenses incurred before January 1, 2011.

Do I need to pay an entire medical expense from my HSA?
You can use your HSA to pay for or reimburse all or part of a qualified medical expense. Any amount of an expense that cannot be covered by your HSA balance would need to be paid from other sources of funds you have. Be careful not to spend more than the balance of your HSA.

How long after I incur a qualified medical expense can I pay for it or reimburse myself with a tax-free distribution?
There is no time limit on when an HSA distribution must occur. You may take HSA distributions in a later year to pay or reimburse qualified medical expenses incurred in previous years if you incur those expenses after you establish the HSA. In other words, you can take a nontaxable distribution the current year to pay or reimburse qualified medical expenses incurred in any prior year, but only if you incurred those expenses after you established the HSA.

What if I take a distribution and it is not used to pay for or reimburse a qualified medical expense?
Any HSA distribution you do not use for qualified medical expenses is subject to federal income tax and a 20 percent penalty. A distribution not used for qualified medical expenses is subject to income tax only and not the 20 percent penalty tax if:

  • You are disabled as defined in IRC Section 72(m)(7),
  • You have reached age 65, or
  • Distribution is made due to your death.

Can I return a distribution taken from my HSA in error?
If you mistakenly distribute assets from your HSA, you may be able to return the assets to the same HSA. However, the law does not require an HSA custodian/trustee to accept the return of a mistaken distribution. If your HSA custodian/trustee permits the return of a mistaken distribution, you will need to be prepared to provide the Internal Revenue Service (IRS) with clear and convincing evidence that the HSA distribution was the result of a mistake of fact due to reasonable cause. A mistaken distribution can be returned no later than April 15 following the first year you knew or should have known the distribution was a mistake.

Examples
Mary took a $400 HSA distribution to pay for a medical expense. Later, she realized that her insurance covered more of her expenses than she had anticipated, and she had only a $300 qualified medical expense. Mary wishes to return a $100 mistaken distribution to the same HSA.

Bill mistakenly used his HSA debit card to pay for $75 in groceries. After discovering the error Bill requests to return the $75 to the HSA as a mistaken distribution.

In both examples if the HSA custodian/trustee permits the return of a mistaken distribution, and the HSA owner determines there is clear and convincing evidence that an HSA distribution was the result of a mistake of fact due to reasonable cause, the HSA owner may repay the mistaken distribution no later than April 15 following the first year he/she knew or should have known the distribution was a mistake. Under these circumstances, the distribution is not included in the HSA owner’s gross income or subject to the 20 percent penalty tax, and the repayment is not subject to the penalty tax on excess contributions. An HSA custodian/trustee that allows the return of a mistaken distribution may rely on the HSA owner's representation that the distribution was a mistake.

How is HSA activity reported to the IRS?
Each year, your HSA custodian/trustee reports to the IRS on IRS Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, the contributions made to your HSA and on IRS Form 1099-SA, Distributions From an HSA,Archer MSA, or Medicare Advantage MSA, any HSA distributions you take. In addition, you file IRS Form 8889, Health Savings Accounts (HSAs), as part of your federal income tax return to show your HSA contribution and distribution activity.

How are Distributions Made by Check or Electronic Fund Transfer Treated for Reporting Purposes?
An HSA custodian/trustee will generally treat a distribution made by check, electronic bill pay or debit card as a normal distribution. Consult your HSA custodian/trustee to find out its specific policy regarding distributions made by check or electronic fund transfer.

What happens to my HSA in the event of my death?
You may name a beneficiary to inherit your HSA assets after your death. Upon your death, your HSA is treated as follows:

Spouse Beneficiary

  • Becomes the spouse’s HSA as of the date of death.
  • Distributions used for the decedent’s or survivor’s (and survivor’s dependents) qualified medical expenses are tax free.


Nonspouse Beneficiary

  • No longer an HSA as of the decedent’s date of death.
  • Beneficiary is responsible for federal income tax on the fair market value (FMV) as of the date of death.
  • Amounts used for the decedent’s qualified medical expenses within one year of the date of death reduce the taxable amount.


Estate Beneficiary

  • No longer an HSA as of the decedent’s date of death.
  • The FMV of the HSA as of the date of death is included in the HSA owner’s gross income for his last taxable year.


This web page is intended to provide general information concerning the federal tax laws governing HSAs. It is not intended to provide recommendations or legal advice, or to be a detailed explanation of the rules or how such rules may apply to your individual circumstances or under your state tax laws.

For specific information, you are encouraged to consult your tax or legal professional. IRS Publication 969, Health Savings Accounts and Other Tax- Favored Health Plans, the instructions to IRS Form 8889, and the IRS’s website, www.irs.gov, may also provide helpful information. Wolters Kluwer Financial Services © 2016

1Consult your tax and legal professional to determine eligibility, contribution amounts and distribution qualification for a Health Savings Account.
2For current rate information on our interest bearing checking accounts, please contact a banker.
3An image statement has images of the front of your cancelled checks printed on your bank statement.
4Mastercard® Zero Liability Policy means as a cardholder, you will not be held responsible for unauthorized transactions if your card is lost or stolen, or your card number is used without your permission. Mastercard SecureCode® gives you an additional layer of online shopping security. To learn more and enroll, visit AnchorLink.com/personal-checking.

CDs - Certificates of Deposit

Certificates of Deposit offer competitive returns on FDIC-insured savings. They're a great choice if you are saving for a special event down the road. Our Individual Retirement Account (IRA) Certificates of Deposit can be an important part of your overall planning for retirement. You decide the amount to put in your Certificate of Deposit and the term. Keep in mind that you'll generally receive a higher interest rate on Certificates of Deposit with longer terms and higher balances. Certificates of Deposit and IRA Certificates of Deposit offer flexible terms from 91 days to five years and competitive interest rates. 

CDARs

CDARS® is one of the safest and smartest tools for investors looking to protect their large-dollar investments while earning CD-level returns that may compare favorably to Treasury and money market funds.

Why CDARS®?
CDARS is one of the safest and smartest investment vehicles for investors looking to protect their large-dollar investments while earning CD-level returns. CDs placed through CDARS offer: 

  • Access to multi-million-dollar FDIC insurance;1
  • The ease of working through one trusted relationship, earning one rate per maturity, and receiving consolidated statements;
  • Possible relief from ongoing collateralization—because CDARS deposits are eligible for FDIC protection, you may not need to perform the time-consuming tasks of continually collateralizing your deposits and tracking changing collateral values on a recurring basis;2  
  • The power of daily compounding;
  • A finite maturity date (in contrast to auction-rate or some adjustable-rate securities); and
  • The ability to have your funds available to support lending initiatives that strengthen the local community.3

How can deposits greater than the standard FDIC insurance maximum ($250,000) be insured by the FDIC?
The standard FDIC insurance maximum is $250,000 per insured capacity, per bank. So, you can run around to multiple institutions to deposit your funds to receive the same coverage you can access using CDARS. Or you can place your large-dollar deposit with us, a member of the CDARS Network. Your deposit is divided into smaller amounts and placed with other CDARS Network members, each an FDIC-insured institution. Then, those member institutions issue CDs in amounts under $250,000, so that your deposit is eligible for FDIC insurance at each member bank. By working directly with us, you can access coverage from many (and receive just one regular statement from us).

Who has custody of my funds?
Funds placed through CDARS are deposited only into FDIC-insured banks. We act as custodian for your CDARS deposits, and the subcustodian for CDARS deposits is The Bank of New York Mellon (BNY Mellon), the largest custodian in the world.4

Unique to CDARS, you as a depositor can obtain a confirmation of records maintained by BNY Mellon as subcustodian to reconcile those records with the statements received from us. At any time, as often as desired, you as a depositor can obtain a certified statement from BNY Mellon that confirms the exact amount of your CDs, including principal balance and accrued interest, for each FDIC-insured institution that issues a CD through CDARS.

You can submit a request for the certified statement, along with BNY Mellon’s processing fee, through us. BNY Mellon will send the certified statement directly to you or to another party designated by you, such as an auditor.

How can my funds be used locally if my CDs are issued by financial institutions all over the country?
When we exchange deposits with other CDARS Network members on a dollar-for-dollar basis, the same amount of funds placed through the Network returns to us. As a result, the total amount of your original deposit can remain with our bank and be used for local lending. (CDARS® ReciprocalSM transactions only)

Is my account information safe?
Your account information is protected; your relationship remains between you and Anchor Bank.

What happens if a CDARS Network member bank fails?
Most of the banks that have failed in the United States in recent years were not CDARS Network members or did not hold any CDARS deposits when they failed. When a Network member has failed, the bank’s CDs issued using CDARS in most cases have been transferred to a healthy institution—the FDIC’s preferred method for handling bank failures. In cases where the FDIC has been unable to find a healthy institution willing to accept such a transfer, it has arranged for the payment of the insured principal and accrued interest to the depositors. This payment has usually occurred within a matter of days. 

Please go to http://www.fdic.gov/deposit/index.html to learn more about FDIC insurance. 
Click here to find banker.

You should compare the current rates and features of CDs (including CDs placed through the CDARS service) to other investment alternatives. Past performance may not be representative of future performance or success.  

1 Limits apply. Funds may be submitted for placement only after a depositor enters into a CDARS Deposit Placement Agreement with our bank. This agreement contains important information and conditions regarding the placement of funds. If a depositor is subject to restrictions with respect to the placement of funds in depository institutions, it is the responsibility of the depositor to determine whether the placement of the depositor’s funds through CDARS, or a particular CDARS transaction, satisfies those restrictions. Funds may be submitted for placement only after a depositor enters into a CDARS Deposit Placement Agreement with our bank. The agreement contains important information and conditions regarding the placement of funds by our bank through CDARS.

2 If a depositor is subject to restrictions with respect to the placement of funds in depository institutions, it is the responsibility of the depositor to determine whether the placement of the depositor’s funds through CDARS, or a particular CDARS transaction, satisfies those restrictions.

3 When deposited funds are exchanged on a dollar-for-dollar basis with other banks in the CDARS Network, our bank can use the full amount of a deposit placed through CDARS for local lending, satisfying some depositors’ local investment goals or mandates. Alternatively, with a depositor’s consent, our bank may choose to receive fee income instead of deposits from other banks. Under these circumstances, deposited funds would not be available for local lending.

4 Please see www.bnymellon.com/about/index.html for details. 

CDARS is a registered service mark, and Reciprocal is a service mark, of Promontory Interfinancial Network, LLC.

Savings Bonds

Savings bonds are a low-risk, secure method of saving and earning interest on your money while protecting you from inflation. Please visit Treasury Direct for more information about purchasing savings bonds for individuals.