you should have come across a question of the excess withdrawn after the end of the year
to which you would enter check that the excess withdrawn. this will show up on schedule 1 line 8e - no need for corrected w-2 it's correct
any income withdrawn must be reported as misc income in the year of withdrawal
form 5329 instructions HSA section
You can withdraw some or all of the
excess contributions for 2021 and they will
be treated as not having been contributed
if:
• You make the withdrawal by the due
date, including extensions, of your 2021
return; and
• You withdraw any income earned on
the withdrawn contributions and include
the earnings in gross income for the year
in which you receive the withdrawn
contributions and earnings
you should have come across a question about withdrawing the excess HSA by 4/18/2022 which you should answer yes because you already did it. the penalty goes away as does the 5329 because withdrawing the excess eliminates the excess which eliminates the penalty.
the excess withdrawn (but not the income) will show up on schedule 1 line 8e - no need for a corrected w-2 it's correct
here's why. if the employer contributed the $100 box 1 on your w-2 is not affected but the withdrawal shows up on schedule 1 as additional income
if you made all the contributions - box 1 of your w-2 should have been reduced by $4,700 (in fact your employer should never have allowed it but that's a different story) your wages are understated by $100 reporting the 100 on schediule1 corrects the underreported wages.
WHAT YOY MAY HAVE DONE WRONG. you should have contacted the administrator to request the withdrawal of the excess contribution plus earning thereon. they would calculate the earnings and send you the money. if your guesstimate of the earnings is too high, you withdrew too much which is subject to a 20% penalty - nonqualified distribution. there's no way to correct this.
if you withdrew too little, the excess remaining is subject to a 6 % penalty but you do have until 4/18/2022 to fix this.
