We are not aware of a requirement to make HSA interest payments at any particular frequency. The IRS’ form HSA agreements do not specify that interest be paid monthly or at all. Additionally, Regulation DD does not impose a requirement to pay interest “at any particular frequency,” and the official commentary to Regulation DD provides that “[[i][/i]i]nstitutions choosing to compound interest may compound or credit interest annually, semi-annually, quarterly, monthly, daily, continuously, or on any other basis.”

Consequently, we believe it would be permissible to compound and make interest payments on HSA accounts on a quarterly or semi-annual basis — provided such payments are consistent with your HSA account agreements and disclosures.

For resources related to our guidance, please see:

• Internal Revenue Code, 26 USC 223(d)(1) (“The term ‘health savings account’ means a trust created or organized in the United States as a health savings account exclusively for the purpose of paying the qualified medical expenses of the account beneficiary, but only if the written governing instrument creating the trust meets the following requirements:

(A) Except in the case of a rollover contribution described in subsection (f)(5) or section 220(f)(5), no contribution will be accepted— (i) unless it is in cash, or (ii) to the extent such contribution, when added to previous contributions to the trust for the calendar year, exceeds the sum of— (I) the dollar amount in effect under subsection (b)(2)(B), and (II) the dollar amount in effect under subsection (b)(3)(B).

(B) The trustee is a bank (as defined in section 408(n)), an insurance company (as defined in section 816), or another person who demonstrates to the satisfaction of the Secretary that the manner in which such person will administer the trust will be consistent with the requirements of this section.

(C) No part of the trust assets will be invested in life insurance contracts.

(D) The assets of the trust will not be commingled with other property except in a common trust fund or common investment fund.

(E) The interest of an individual in the balance in his account is nonforfeitable.”)

• IRS Form 5305-C, Health Savings Custodial Account

• IRS Form 5305-B, Health Savings Trust Account

• Regulation DD, 12 CFR 1030.4(b)(2)(i) (“Account disclosures shall include the following, as applicable: . . . The frequency with which interest is compounded and credited.”)

• Regulation DD, 12 CFR 1030.7(b) (“This section does not require institutions to compound or credit interest at any particular frequency.”)

• Regulation DD, Official Interpretations, Paragraph 7(b), Comment 1 (“Institutions choosing to compound interest may compound or credit interest annually, semi-annually, quarterly, monthly, daily, continuously, or on any other basis.”)