Withdrawal of money for other purposes
Sec. 17. (a) An employee may, under this section, withdraw
money from the employee's medical care savings account for a
purpose other than the purposes set forth in section 13 of this
chapter.
(b) Except as provided in section 11(b) of this chapter, if an
employee withdraws money from the employee's medical care
savings account on the last business day of the account
administrator's business year for a purpose not set forth in section 13
of this chapter:
(1) the money withdrawn is income to the individual that is
subject to taxation under IC 6-3-2-18(e); but
(2) the withdrawal does not:
(A) subject the employee to a penalty; or
(B) make the interest earned on the account during the tax
year taxable as income of the employee.
(c) Except as provided in section 11(b) of this chapter, if an
employee withdraws money for a purpose not set forth in section 13
of this chapter at any time other than the last business day of the
account administrator's business year, all of the following apply:
(1) The amount of the withdrawal is income to the individual
that is subject to taxation under IC 6-3-2-18(e).
(2) The administrator shall withhold and, on behalf of the
employee, pay a penalty to the department of state revenue
equal to ten percent (10%) of the amount of the withdrawal.
(3) All interest earned on the balance in the account during the
tax year in which a withdrawal under this subsection is made is
income to the individual that is subject to taxation under
IC 6-3-2-18(f).
(d) Money paid to the department of state revenue as a penalty
under this section shall be deposited in the local health maintenance
fund established by IC 16-46-10-1.
As added by P.L.92-1995, SEC.2 and P.L.93-1995, SEC.2.
Last modified: May 28, 2006