BillM223
Expert Alumni

Deductions & credits

@DGrigg

 

It sounds like you were covered by an HDHP and had no conflicting coverage (Medicare) for only two months: January and February.

 

Your limit calculation is as follows (I am assuming that you had Family HDHP coverage):

 

2 months * $583.33 (which is $7,000/12)

This equals  $1,166.67

 

PLUS

2 months * $83.33 (which is $1,000/12 - this is the catch-up you get for being 55 or older)

This equals $166.67

 

Together this makes your limit $1,333.33. The only way you could get a limit of $2,000 is by mismarking March as a month covered by the HDHP instead of as by Medicare.

 

Medicare disqualifies you to contribute to an HSA, even if your HDHP policy is still active. And the coverage for the month is determined by the coverage on the first day of the month. You said that you began Medicare on March 1st, so that makes March a Medicare month, not an HDHP month.

 

Please go back into the HSA interview and change that entry.

 

As for your withdrawal of the excess question (now $2,666.67), the IRS has extended all 1040 returns to July 15th, and since the withdrawal of the excess contribution had to be done by the due date of the return as extended. this means that the date is extended to July 15th.

 

However, you have no incentive to wait that long. This is because your excess is accruing interest (presumably) all of which will have to be calculated and reported on your 2020 taxes. Why continue to let that amount increase?

 

If the money is in your HSA, go ahead and visit your HSA custodian's website and see if you can request online a "withdrawal of excess contributions" (otherwise speak to a customer service rep). Note that when your HSA custodian processes this request, they will send you the check for $2,666.67, so why wait?

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