401(h) Retiree Health Accounts

Learn more about 401(h) Retiree Health Accounts

For further plan information, contact MissionSquare Retirement or your employer's benefits office.

The 401(h) Retiree Health Account, paired with your 401(a) Money Purchase Plan, helps you build assets for medical expenses on a tax-free basis.


Once your employer adopts a 401(h) plan, participation is mandatory for eligible employees. Eligibility is defined by your employer.1


Contributions are determined by your employer.2 Your employer defines the contribution types, amount, and frequency for the eligible group(s). Examples include:

  1. Employer contribution of a fixed percentage or dollar amount.
  2. Mandatory contributions of employee compensation.

401(h) Account Tax Benefits

  • Pre-tax contributions, if applicable, reduce your taxable income
  • Tax-free distributions, including earnings, for qualifying medical expenses


At enrollment, a target-date fund based on your age or another default investment option is selected for you. You have the flexibility to then make changes at any time. You control how contributions and associated earnings are invested, choosing from available investment options.

Benefit Reimbursements

To request reimbursements, you must:

  • Be eligible for benefits. An employee may become eligible to use assets when retired.3
  • Have medical expenses that qualify. (Refer to your plan summary for a list of eligible expenses.)

Spend-Down Right

Upon the employee's death, remaining funds are made available to the surviving spouse and eligible dependent(s) for reimbursement of eligible medical expenses.

1 Employees must be eligible to participate in an existing 401(a) Money Purchase Plan in order to be eligible to participate in the 401(h) Account.

2 Contributions made to a 401(h) account for medical benefits: (a) may not exceed 25 percent of the aggregate contributions made to the overall 401 Plan; and (b) are subject to IRC Section 415(c) limits.  Visit www.missionsq.org/contributionlimits for more information.

3 The employee may become eligible to receive 401(h) medical benefits when they are eligible under the pension plan to receive retirement benefits, or else be retired by an employer providing such medical benefits by reason of permanent disability.

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