So the HSA custodian has agreed for us to return the mistaken distribution and we should be able to get the funds back into the HSA in the next few days. They said it doesn't matter if it processes after the April 18 tax deadline. We have filed for an extension on our taxes so we will take our time and get it right.
My understanding is that we will have to pay the 10 percent penalty on 2023 taxes assuming we don't qualify for the year test.
Thanks for your help. Please let us know if there is anything else we should do.
