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Employee Services

One of the best ways to attract quality employees to your small business is to offer high-quality employee benefits. As a family-owned, community-oriented organization, Anchor Bank understands the importance of providing quality benefits packages that help employees take their minds off of their financial future and allow them to focus on their work.

HSA - Health Savings Account

Anchor Bank’s Health Savings Account (HSA) is a great way to save for future medical expenses. There are certain advantages to contributing funds into this account, including favorable tax benefits1.

How it works for you
• Funds contributed to an HSA belong to the account owner, are completely portable and may be tax deductible.
• Money can accumulate in the account with tax-free earnings every year.
• Distributions for qualified medical expenses are not taxable.
• No monthly fee if one of the balance requirements are met: average ledger balance of $2,500 in total deposits or $5,000 minimum balance in total loans.
• $5 monthly service fee will be charged if account balances fall below the stated requirement
• Variable interest earned on the daily collected balances and paid monthly based on the following tiers2:
– $0 - $4,999.99
– $5,000 +
• Receive image statement for $5.50 per month3
• No monthly fee on Health Savings Account card4

Am I eligible for an HSA?
You are eligible for a regular HSA contribution if, with respect to any month, you:
• Are covered under a high-deductible health plan (HDHP) on the first day of such month;
• Are not also covered by any other health plan that is not an HDHP (with certain exceptions for plans providing preventive care and limited types of permitted insurance and permitted coverage);
• Are not enrolled in Medicare; and
• Cannot be claimed as a dependent on another individual’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
2013 $1,250 $2,500
2014 and later $1,250* $2,500*

*Subject to annual cost-of-living adjustments.

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
2013 $6,250 $12,500
2014 and later $6,250* $12,500*

*Subject to annual cost-of-living adjustments.

What are an HSA owner's responsibilities?
If you are eligible, you can establish an HSA in much the same way you would establish an IRA—with a qualified trustee or custodian. Each year, you are responsible for determining your allowable annual HSA contribution and whether you have qualified medical expenses eligible for reimbursement with nontaxable HSA distributions.

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 below. 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.

Contribution Limits 

Tax Year Standard Limits
Self Only
Standard Limits
Catch-up Contribution
2013 $3,250 $6,450 $1,000
2014 and later $3,250* $6,450* $1,000

 *Subject to annual cost-of-living adjustments.

May I claim a federal tax deduction for my HSA contribution?
Contributions to an HSA are tax deductible, the earnings grow tax deferred, and distributions to pay or reimburse qualified medical expenses are tax free.

You may deduct contributions made by anyone other than your employer as long as they do not exceed the maximum annual contribution amount. Employer contributions are not wages for federal income tax purposes.

Rollovers and transfers from HSAs, IRAs, Archer medical savings accounts, health reimbursement arrangements, and health flexible spending accounts are not tax deductible.

When is the conribution deadline for funding an HSA?
The deadline for regular and 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.

How are HSA distributions taxed?
The qualified medical expenses must be incurred after the HSA has been established.

HSA distributions used exclusively to pay for or reimburse qualified medical expenses incurred by you, your spouse, or your dependents are not included in gross income.

Any other distributions are included in income unless rolled over. Distributions not used to pay for or reimburse qualified medical expenses or not rolled over are subject to an additional 20 percent tax unless made after your death, your disability, or your attainment of age 65.

HSA custodians/trustees are not required to determine whether HSA distributions are used for qualified medical expenses.

Is a distribution for non-perscription 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 perscription requirement does not apply to the payment or reimbursement of drug or medicine expenses incurred before January 1, 2011.

Can I return a mistaken distribution?
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.

How is HSA activity reported?
Each year, your HSA custodian/trustee reports to the IRS on IRS Form 5498-SA the contributions made to your HSA and on IRS Form 1099-SA 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 debit card 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?
Spouse beneficiary – If your spouse is the beneficiary of your HSA, the HSA becomes his/her HSA.
Nonspouse beneficiary – If your beneficiary is not your spouse, the HSA ceases to be an HSA as of the date of your death. If your beneficiary is your estate, the fair market value of the HSA as of the date of your death is included as income on your final income tax return. For other beneficiaries, the fair market value of your HSA is included as income for the recipient in the tax year of your death.

This information is intended to provide general information concerning the federal tax laws governing HSAs. It is not intended to provide 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 web site,, may also provide helpful information.

Wolters Kluwer Financial Services © 2006, 2012

1Consult your tax and legal professional to determine eligibility, contribution amounts and distribution qualifications 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. 4Use it to make purchases everywhere that MasterCard® debit cards are accepted. Not available for use at ATM machines.

SEP - Simplified Employee Pension Fund

A simplified employee pension (SEP) plan is a retirement plan established by an employer. Each year, the employer can contribute a certain percentage of each eligible employee's compensation directly to the employee’s traditional IRA.

Am I eligible for a SEP plan?
As a business owner, whether incorporated or not, you may establish a SEP plan. Sole proprietors and partnerships can have SEP plans, even if there are no employees. However, if you currently maintain a qualified retirement plan, you cannot establish the Internal Revenue Service (IRS) model SEP plan for your business.

What is the maximun SEP contribution?
Under the IRS model SEP plan; you must contribute a uniform percentage of compensation for each eligible employee. The maximum contribution is the lesser of the contribution amount or 25 percent of each employee’s compensation. The chart that follows shows these amounts.

Tax Year Contribution Limit Compensation
2013 $51,000 $255,000
2014 $51,000=COLA* $255,000+COLA

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

Note: For SEP plans that allocate employer contributions with a formula integrated with social security, the social security taxable wage base for 2013 is $113,700. This is an increase from the 2012 amount of $110,100.

For an employee, compensation is generally the Form W-2 wages from the employer sponsoring the SEP plan. For a self-employed person, compensation is his/her earned income from self-employment. Special adjustments to compensation are necessary before a self-employed person can apply the desired contribution percentage.

Do I get a tax deduction for my SEP plan contributions?
Yes! Dollars you contribute on behalf of yourself and your employees, within the previously mentioned limits, are generally deductible as a business expense. A self-employed individual claims his/her personal SEP plan contribution as an adjustment to gross income on his/her personal income tax return.

Must I contribute for each of my employees?
No. The SEP plan may exclude certain employees from an annual SEP plan contribution because of:
• Age – A SEP plan may exclude employees who are younger than 21 years of age. However, an employer must contribute for any eligible employee, who is older than age 21, even those over age 70 1/2.
• Service – A SEP plan may exclude employees who have not worked in at least three of the immediately preceding five years.
• Minimum Compensation – A SEP plan may also exclude employees who have earned less than $550 during 2009 and 2010 (subject to annual cost-of-living adjustments).
• other – A SEP plan may also exclude nonresident aliens receiving no U.S.-source income from the employer, as well as employees covered under a collective bargaining agreement if retirement benefits were a subject of negotiation.

Must I contribute the sam percentage each year?
No. You have until the due date of your business’s federal income tax return to determine your SEP plan contribution each year. If you wish, you may skip the contribution entirely for any year.

What happens to the assets after I make SEP plan contributions?
All SEP plan contributions are made to eligible employees’ traditional IRAs. Once the SEP contribution has been made, each employee’s account will be subject to all of the traditional IRA rules. These include limits on withdrawals prior to age 59 1/2 and required minimum distributions at age 70 1/2.

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

May I have a traditional or ROTH IRA in addition to a SEP plan?
Yes. You and your employees may contribute to traditional and/or Roth IRAs if eligible. If a SEP plan contribution is made, you are considered an active participant in an employer-maintained retirement plan. Therefore, the deductibility of your traditional IRA contribution will depend on your modified adjusted gross income and income tax-filing status.

Is it difficult to establish a SEP plan?
No. To establish an IRS model SEP plan, you must complete an IRS-approved form, provide a copy to each eligible employee, and have each of them establish a traditional IRA.

When can I establish a SEP plan?
The deadline for establishing or contributing to a SEP plan is your business’s income tax-filing deadline, including extensions.

Is there a tax credit available to start a SEP plan?
Yes. A tax credit under Internal Revenue Code 45E is available to offset pension plan startup costs for eligible small employers. The amount of the credit is 50 percent of a plan's qualified startup costs, not to exceed $500 for the first year and the two taxable years immediately following. An eligible employer uses IRS Form 8881, Credit for Small Employer Pension Plan Startup Costs, to claim the credit. The tax credit is available for costs paid or incurred in the first three plan years. Contact your tax or legal professional to determine your eligibility for this tax credit.

How do I establish a SEP plan?
See any of our retirement plan representatives and we will explain the nature of these plans in more detail. You should consult your tax or legal professional prior to establishing a SEP plan for your business.


This information is intended to provide general information on federal tax laws governing simplified employee pension plans. It is not intended to provide legal advice or to be a detailed explanation of the rules or how such rules may apply to an employer’s individual circumstances. For specific information, an employer should consult a tax or legal professional, IRS Publication 560, Retirement Plans for Small Business, IRS Publication 590, Individual Retirement Arrangements (IRAs), and the IRS’s website,, may also provide helpful information. Wolters Kluwer Financial Services© 2011, 2012.


Gift Cards

The perfect gift for a special occasion or a great reward for a job well done at the office. A fast and convenient gift idea, you can purchase your Gift Card at any of our Anchor Bank locations throughout the Twin Cities.

Our Gift Cards work like a credit card—you can use them wherever MasterCard® is accepted. Simply swipe your card (or hand it to the merchant) and select the “Credit” option. As long as your card balance is equal to or greater than the expense, you’re all set. If the balance is less, inform the merchant of your current balance and request a split transaction to combine payment options.

To check your balance anytime, log on to

You can also check your balance, report a lost or stolen card, or report fraudulent or unauthorized transactions by calling Customer Service at 800-827-6227.