HSA contributions can be made on a pre-tax basis.

• A. True
• B. False
• C. Only by the employer
• D. Only after tax

Answer: (A)

HSA contributions can be made on a pre-tax basis through payroll deductions arranged by an employer (often under a Section 125 cafeteria plan). This means the money goes into the HSA before federal income tax is calculated, reducing the taxable income for that year. You can also contribute personally with after-tax dollars and still benefit from a tax deduction for those contributions on your tax return, which is another form of tax-advantaged funding, but it isn’t pre-tax withholding. So the statement is true because there is a valid pre-tax pathway for funding an HSA. The other options aren’t correct since contributions aren’t limited to only those made by the employer and aren’t necessarily only after-tax.