Did anyone mention "mistaken distribution"? That's when you ask for distribution but later discover that you shouldn't have - for example, you paid for a medical expense with your HSA debit card that was actually covered by your health insurance.
It sounds to me that the HSA custodian is treating this as a mistaken distribution - if so, that's fine, and it is as simple as completing a form and sending the money back. Note that the HSA custodian does not have to honor your request to process a mistaken distribution, so whatever you do, be nice to them.
Yes, you will also return the money, but the HSA custodian has to handle the paperwork correctly so that it does not appear to be another contribution. If they say they have it handled and won't be reported as an additional contribution, be content.
In the future, please do NOT withdraw amounts that you might think are excess contributions. Wait until you do your tax return in the following spring and let TurboTax tell you what the excess is (if any). Withdrawing the wrong amount can subject you to penalties because you are supposed to withdraw money only for qualified medical expenses and the exact amount of the excess contribution. Anything else is subject to a 20% penalty.
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