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Are PFICs held in an HSA subjected to reporting requirements and taxes?

I have a question about the rules regarding Passive Foreign Investment Companies (PFICs). I understand that in taxable accounts, US persons are required to report all PFICs each year on Form 8621. However, when held in a tax-exempt account (such as an IRA), this requirement no longer applies as they will not be treated as a shareholder [according to IRS Notice 2014-28, Section 3: "Accordingly, the Treasury Department and the IRS will amend the definition of shareholder in the section 1291 regulations to provide that a U.S. person that owns stock of a PFIC through a tax exempt organization or account (as described in §1.1298- 1T(c)(1)) is not treated as a shareholder of the PFIC."] 

 

Does this apply to my HSA? Could I hold a foreign etf in my HSA and not have to worry about the PFIC reporting/tax requirements? I know that investments in HSAs are tax-exempt but I don't know if this type of vehicle qualifies, and I'm having trouble finding any information specific to HSAs.

 

Thank you!

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1 Reply
DaveF1006
Employee Tax Expert

Are PFICs held in an HSA subjected to reporting requirements and taxes?

According to IRS rules, you would only be required to report if you were a shareholder or a stock holder. There are no reporting requirements if you have ETF or PFIC funding your HSA. 

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