The act of taking a distribution and marking it as not for qualified medical expenses will cut off the long-running excess. I.e., steps 3 and 4.
Yes, it seems odd, but that's how it works.
Yes, in your case, you will probably have a large distribution on a 1099-SA, of which part will be equal to this long-running excess. When you tell TurboTax that part of the distribution was not for qualified medical expenses, this will cause the excess to be taken care of.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
