@BillM223
Hi Bill
I've fallen into the trap where I made an excess contribution in 2018 of 4,000. My HSA is old as it predates the requirement of an HDHP. I haven't had an HDHP for years but still had the HSA as it had funds in it. We were using it for medical bills so the balance was declining. We decided in 2018 to make a contribution and let it sit in the HSA and not touch it so it would grow for us to use in our retirement. When we did that in TT 2018, it told us about the 6% penalty if we didn't remove the contribution from the HSA. We figured the $229 penalty would be worth the tax free growth of the HSA funds that got invested until we retired down the road. So we kept the excess contribution in the HSA and paid the penalty on our 2018 return as shown on form 5329 row 49. Then I'm doing my 2019 taxes in TT and it asked me if I overfunded in 2018. I said yes but thought it was odd to ask me since I already paid the penalty. Then I researched and found out that as long as the excess is in the account, it's counted as an excess every year and penalized. Doh! So to avoid recurring penalties we decided we'd remove the excess. But when i checked off the box to say we'd remove it by Jul 15 2020, TT told me "unfortunately, all of your excess contribution is caused by a prior year excess contribution. It is too late to remove this excess contribution". So it seems like TT is telling me I'm stuck with the penalty until I die. That can't be right. Any thoughts on why TT seems to want to put me in an endless loop and not be ok with me saying we'll remove the excess contribution?
Thanks in advance
James
