BillM223
Expert Alumni

After you file

"Basically I got my first HSA account on 2020 and did a prior year contribution to a 2019 HSA. " and "On July 2020, I got a new job and became eligible for a HSA for the first time ever."

 

Are you saying that you did not have HDHP coverage until July 2020? If so, you were not eligible to make a contribution to a 2019 HSA. In this case, the whole contribution should have been withdrawn.

 

You cannot contribute to an HSA before you are eligible to do so.

 

"I called my broker (Fidelity) to help change it and they said they could not because its past their deadline."

 

Yes, you could not withdraw the "2019 HSA" contributions after the due date of your 2019 return (either July 1, 2020 or, if extended, October 15, 2020).

 

As noted above, the only way to cure the "excess" after those dates is to take a distribution of the entire amount, and when the 1099-SA is sent to you, you enter it and indicate that none of it was used for qualified medical expenses. This will cause it to be added to line 8 (Other Income) of Schedule 1 (1040) to be subject to federal income tax AND you will be assessed a 20% penalty on that amount.

 

"I told TurboTax that I plan to withdraw this money (and I think paid the 6% fee) but how do I take it out of my HSA?"

 

If you do what I just suggested, then you are not "withdrawing the excess". Besides, if you told TurboTax that you were withdrawing it, it would not try to roll it over to the next year and ding you 6%...however, because the excess appeared to be form 2019, TurboTax should stop you from trying to withdraw the excess, because in the case, it can't be cured by withdrawing the excess but can be cured only by taking the distribution and paying the income tax and penalty.

 

Anyway, please review my questions in the first paragraph and let me know if I am on the right track.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"