2020
Your annual HSA contribution limit was 7,100. You contributed 7,100 and 3,550 for a total of 10,650. The created an excess of 3,550.
You said that you withdrew 3,550 in January 2021. This means that the excess has been “cured” (as if it never existed). There is no carryover to 2021.
2021
Your annual HSA contribution limit is 7,200. You contributed (5,700+240) + (3,600 + 1,000) for a total of 10,540. This makes an excess for 2021 of 3,340. You appeared to have withdrawn 5,610, did you?
In the future, please do the following:
1. Ignore the 5498-SA. It will just confuse you because some of the boxes don’t mean what you would think they mean.
2. Do NOT withdrew any money from an HSA until TurboTax tells you that you have excess contributions and tells you the amount. It is difficult for taxpayers to correctly calculate the amount of the excess. This means that you should not have withdrawn any money in March 2021 for 2021, because at that point, you didn’t know what the excess would be (if for no other reason, that your second employer made more contributions at the end of the year, that you didn’t allow for in March).
3. In the same vein, don’t try to calculate the earnings on the excess while they were in the HSA. Let the HSA custodian do that (it will appear on the 1099-SA with a distribution code of 2.
4. If you withdrew 3,550 for 2020 and 3,450 for 2021, then your HSA is set. If, however, you withdrew more than 3,340 for 2021, then you have withdrawn too much and this will need to be corrected.
5. MOST IMPORTANTLY, you cannot “withdraw” the excess for a year and also “carry over” the same excess to next year. This is why I was having trouble understanding what you were talking about. If you withdraw the entire excess, then there is nothing left to carry over to the next year. We use these terms in very specific ways.
OK, tell me, did you withdraw 3,340 for 2021 or 5,610 as your table suggests? If you withdrew 5,610 for 2021, then you withdrew 2,270 too much. Please call your HSA custodian, apologize profusely, and see if they will let you declare that 2,270 of that last distribution was a “mistaken distribution”. They don’t have to allow this, so grovel if you need to. Otherwise, you will owe a 20% penalty on that 2,270.
Now, does this all make sense?
@Jerryxe
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