Definition: Medical Savings Accounts are tax-deductible savings accounts to save for medical expenses. Archer MSAs, and their replacement Health Savings Accounts, function like individual retirement accounts. You make contributions now. Your contributions earn interest, which may be tax-deferred or tax-free. Withdrawals for medical expenses are tax-free withdrawals. Withdrawals for other purposes become taxable, and penalties may apply. For 2003, you can deduct your contributions to an Archer MSA using Form 8853 (PDF) and Instructions (PDF). For more information, see IRS Publication 969, Health Savings Accounts.
Also Known As: MSA, Archer MSA, Medical Savings Accounts
