TL;DR — A 401(h) is a separate medical-benefit account inside a qualified Defined Benefit or Cash Balance pension plan (IRC §401(h)). Contributions are tax-deductible, growth is tax-deferred, and qualified §213(d) reimbursements to retirees are generally tax-free. This Resource Center curates 20 guides across foundations, tax mechanics, IRS rules, funding limits, DB integration, and audience-specific case studies.
Start here. The 401(h) Resource Center organizes our entire 401(h) library — from the foundational definitions and the tax trifecta, to advanced Cash Balance integration, eligibility rules, funding limits, reimbursements, and real-world case studies. Use the sections below to find the guide that matches where you are in the evaluation process.
New to 401(h)? Start with the Pillar Guide
The 401(h) Medical Expense Plan Guide is our most comprehensive resource — covering structure, tax treatment, comparison tables, accumulation potential, candidate profile, and implementation steps in one place.
Open the Pillar Guide →1 · Foundations
Definitions, FAQs, and vocabulary for anyone new to 401(h).
A plain-English overview of the 401(h) medical benefit account, its statutory basis, and how it sits inside a qualified Defined Benefit pension plan.
The most common questions CPAs, advisors, and owners ask — answered concisely with statutory citations.
Defined terms used across the library — subordination, §213(d) expenses, key employee, separate account, and more.
The complete, authoritative 401(h) reference covering structure, tax treatment, accumulation, and implementation.
2 · Tax Treatment & Comparisons
How the tax mechanics work and how 401(h) compares to the accounts your clients already know.
Tax-deductible contributions, tax-deferred accumulation, and potential tax-free §213(d) reimbursement — explained in one walkthrough.
Structural differences, eligibility, funding limits, and when each vehicle is the better fit.
Why a standalone 401(k) cannot host a 401(h) — and the qualified pension structure that can.
The clear answer on IRA, SEP IRA, SIMPLE IRA, and Roth IRA compatibility with 401(h).
3 · Rules, Funding & Reimbursements
The statutory and operational mechanics — what to contribute, what's eligible, and how reimbursements flow.
IRC §401(h), Treas. Reg. §1.401-14, subordination, nondiscrimination, separate accounting, and reversion rules.
How contributions are sized actuarially, the 25% subordination ceiling, and how to screen feasibility.
Which medical, dental, vision, prescription, and long-term-care expenses qualify under IRC §213(d).
Substantiation, documentation, retiree eligibility, spouse and dependent coverage, and TPA administration.
4 · Defined Benefit Integration & Healthcare Risk
How 401(h) fits inside Cash Balance and traditional DB designs — and why retiree healthcare is the planning gap.
How a Cash Balance Defined Benefit plan hosts a 401(h) medical sub-account, with subordination math.
Using a 401(h) inside a DB plan to position dedicated, tax-favored dollars for retiree long-term-care exposure.
What EBRI and Fidelity data say about retiree healthcare spending — and the planning gap most portfolios ignore.
Why 401(h) sits at the intersection of actuarial science, ERISA, and §213(d) — and rarely surfaces in retail advice.
5 · For Specific Audiences
Guides written for the owners and practices that most commonly fit 401(h) planning.
Why medical and dental practices are among the strongest 401(h) candidates and what the design typically looks like.
How closely held business owners with stable cash flow use 401(h) to add deductible, tax-favored healthcare funding.
Illustrative 401(h) + Cash Balance designs across professions, ages, and compensation levels.
A short visual overview of how the 401(h) account works inside a qualified Defined Benefit plan.
Frequently Asked Questions
What is a 401(h) plan?
A 401(h) is a separate medical-benefit account established under IRC §401(h) inside a qualified Defined Benefit or Cash Balance pension plan. Employer contributions are tax-deductible, the account grows tax-deferred, and qualified §213(d) reimbursements to eligible retirees, spouses, and dependents are generally tax-free.
Who is the 401(h) Resource Center for?
It is built for CPAs, financial advisors, TPAs, and closely held business owners — including medical and dental practices — evaluating whether a 401(h) sub-account inside a Defined Benefit or Cash Balance plan fits their tax and retiree-healthcare planning.
How does a 401(h) differ from an HSA?
An HSA is an individual account requiring HDHP coverage with modest annual limits. A 401(h) is an employer-sponsored sub-account inside a qualified pension plan, sized actuarially, with capacity often many times larger — subject to the 25% subordination rule under Treas. Reg. §1.401-14.
Can a 401(h) be added to a 401(k) or IRA?
No. A 401(h) account can only be established inside a qualified Defined Benefit pension plan (including Cash Balance plans). It cannot be attached to a standalone 401(k), profit-sharing plan, IRA, SEP IRA, SIMPLE IRA, or Roth IRA.
What expenses qualify for tax-free 401(h) reimbursement?
Reimbursements are limited to medical care expenses defined under IRC §213(d) — including medical, dental, vision, prescription drugs, Medicare premiums, and qualified long-term-care costs — incurred by eligible retirees, spouses, and dependents.
Next Step for CPAs, Advisors, and Business Owners
If you would like a qualified actuary to evaluate whether a 401(h) arrangement may be appropriate alongside a Defined Benefit or Cash Balance plan for your business, request an introductory consultation. Retirement Actuarial Services LLC has specialized in advanced Defined Benefit plan design and 401(h) integration for closely held businesses and professional practices for decades.
Important Disclosure
This material is provided for educational and informational purposes only and should not be construed as tax, legal, actuarial, investment, accounting, or fiduciary advice. The availability, suitability, contribution limits, deductibility, tax treatment, and reimbursement treatment of any 401(h) arrangement depend on the specific facts and circumstances of the employer, plan sponsor, participant population, plan design, actuarial assumptions, regulatory limits, and applicable IRS and Department of Labor requirements. No strategy described herein is a guarantee of tax savings, contribution levels, reimbursement amounts, investment results, or plan approval. Business owners and advisors should consult qualified tax, legal, actuarial, TPA, and financial professionals before establishing or modifying any qualified retirement plan or retiree medical benefit arrangement. Results vary.
