Got a unique situation:
1. Had HDHP with my employer, and HSA contributions, thru May 2021 (and payroll HSA contributions stopped in June and July)... then switched to HDHP with my spouse's employer the rest of the year. I closed out the HSA account (zero balance) with the custodian and transferred my balance to another custodian.
2. Left my employer in Aug 2021. One week before my departure in Aug, Payroll made a mistake reinstating my HSA contribution but it was duly corrected on my final paycheck.
3. Filed our taxes in April, based on the W2 which I verified showed the correct total of HSA contributions. Did not think to check my balance with my old employer's HSA custodian until April when I found out that they gave me back credit for the correction/reversal. So now there's an erroneous HSA balance on my account, which then overstated my Form 5498-SA issued in May.
4. After so many emails to my former employer and calls to the HSA custodian from April thru June 2022, the response I got is "We cannot do a reversal because the tax year has closed. You have to talk to your advisor".
5. I've found this topic on several websites like https://www.thehortongroup.com/resources/irs-allows-employers-to-recover-mistaken-hsa-contributi
ons#:~:text=As%20a%20general%20rule%2C%20amounts,that%20were%20made%20by%20mistake.
6. Is the HSA custodian's response correct in that they absolutely cannot do the reversal because of the tax year being closed? Does this only leave me with the option of taking the money (which I've emphasized to them should be returned to my former employer) and taking the penalty for excess contributions?
Thanks in advance for your help.
