Steps to cut off an excess contribution that can no longer be withdrawn.
1. Call your HSA custodian and request a distribution for the amount of the excess that is the long-term carryover.
2. The custodian will send you a check for that amount, if there are funds in the HSA.
3. Next year, when you enter your 1099-SA (remember that all your regular distributions will also be in box 1), tell TurboTax that not all of the distribution was for qualified medical expenses, When TurboTax asks for an amount, give it the amount of this long-running excess.
4. TurboTax will add that amount to Other Income (line 8 Schedule 1 (1040)), and charge you a 20% penalty on top of that. HOWEVER, this will cut off the long-running carryover.
5. In the future, if you make an excess contribution, be sure to withdraw it before April 15th.
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