IRS issues memo on FSA carryovers and HSAs

The Internal Revenue Service's Office of Chief Counsel recently issued a memo "Health Flexible Spending Arrangement (health FSA) Carryovers and Eligibilty for a Health Savings Account (HSA)". The memo addresses the following issues:

"May an otherwise eligible individual under section 223(c)(1)(A) of the Internal Revenue Code (the Code) contribute to an HSA if the individual participates in a general purpose health FSA solely as the result of a carryover of unused amounts from the prior year?...

May an otherwise eligible individual under section 223(c)(1)(A) of the Code who participates in a general purpose health FSA solely as the result of a carryover of unused amounts from the prior year contribute to an HSA for any month after all of the carried over health FSA amounts are paid or reimbursed for medical expenses?"

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