@Opus 17Another update: After much back-and-forth with my wife's HRA provider, I have concluded there is no indication the HRA is anything special, and that my HSA contributions have indeed been ineligible. As such, I have initiated a removal of the contributions through my HSA provider.
The HSA provider has since asked me a series of questions. The two main questions are exactly how much should be removed for each year, and whether there are any earnings I need to report. For the amount to withdraw each year, here is what I figured:
2021: 475.01 because I was eligible for four months (July-Oct), and a total of $1,675.01 was contributed during the calendar year. This includes some money contributed after I became ineligible in November, but that's perfectly okay because it's all based on a person's limit for the entire year (in this case $1,200) correct?
2022: $3,600
2023: $1,800
The second question is trickier. They want to know if I have any earnings on my contributions. I only purchased investments with my HSA contributions in 2021 and 2022. I stopped investing after 2022 because of the baby on the way. A couple months ago, I sold all of the investments for a net loss of about -3%. However, here is what I don't understand: Does the amount of "earnings" depend on the year of the sale (in the same way a taxable brokerage account is taxed)? Or, does it depend on the year the investment is purhcased? If I separate it out by year, the investments I purchased in 2021 were sold at a loss of -$185.80 (every "buy" order in 2021 was sold in 2023 for a loss). But the investments I purchased in 2022 were sold at a net gain of $44.96 (about half of the "buy" orders were sold in 2023 for a loss, and half for a gain). Do you know how the IRS would calculate this for the purposes of removing excess HSA contributions and earnings?
(As a side note, I did inform my employer about this situation, and they were uninterested in getting anything returned to them.)
