@ktramo17 wrote:
Last question for you. Do you think it matters that the IRS will get a 1099-SA that shows box 3 with code 2 excess contribution but for my return, when i entered 1099-SA, i changed box 3 to be "normal distribution"? That seems to be the only way to get the software to do what it needs to do from a form standpoint but then there is a general mismatch. My gut says why would the IRS care in this case since i am remitting both income tax and the 20% penalty.
I don't know about the IRS but at most you would get a letter asking for an explanation, and you can answer that with a letter explaining the situation. If you want to be really thorough you could include copies of form 5498 showing the excess was in 2022, not 2025, which would support that code 3 was wrong.
I have a similar situation because I funded my HSA from an IRA this year and that should be a 1099-R with code 1, and I got one with code G (which is for a direct rollover to another IRA). I had to change it to code 1 so that form 8889 would correctly show the HSA funding. I'm surprised that big banks and big brokers don't know some of these rules.
