What type of account is indicated by W-2 Box 12 Code R?

The W-2 Box 12 Code R specifically indicates the contribution to a medical savings account (MSA). When an employer reports this code, it informs the employee that the amounts shown are related to their contributions to an MSA, which is a tax-exempt trust or custodial account.

Medical savings accounts are designed for self-employed individuals and employees of small businesses to help them save for medical expenses. The funds deposited into the MSA can be used for qualifying medical expenses and any earnings on those contributions grow tax-free.

In the context of this question, the mention of “medical savings account” in the correct answer aligns perfectly with the definition and purpose associated with Code R on the W-2. The other options, while relevant to various types of accounts and contributions relevant to tax reporting, do not specifically correspond to this code on the W-2 form.