I'm new to HSAs, and I'm hoping someone can help me with a tricky situation I got myself into. I recently made an excess-contribution withdrawal from my HSA that I now believe I made in error. Here's what happened:
- I made an HSA contribution in January 2020 for the 2019 tax year to reach the maximum contribution limit of $3,500.
- Last month, I withdrew most of that amount as an excess contribution. Why? I was enrolled in a high-deductible health plan for only three months in 2019, so I thought I was eligible to contribute only a quarter of the annual limit, or $875.
- After withdrawing the funds and depositing the check I received from the bank that holds my HSA, I found out about the IRS's "last-month" rule, which states that if you were enrolled in a high-deductible plan on Dec. 1, 2019 (which I was), your contribution limit actually is the full $3,500 for the year. So I really didn't have to withdraw the funds at all.
I contacted the bank that holds my HSA about this, and they told me to just fill out their standard contribution form and send a check to have the amount I withdrew redeposited back into my HSA for 2019. That sounds a little too simple to me, but maybe it is that simple. Just wondering if anyone has any insights into this kind of situation. Thanks in advance.
