@dmertz, perhaps you can disregard my previous message. I found a similar question answered here: https://ttlc.intuit.com/community/taxes/discussion/how-to-enter-1099-sa-correctly-in-turbotax/00/288...
The last comment mentions Section 223(f)(3)(A)(i) which doesn't really clarify which code to use. However, the message also notes: "Because any normal (code 1) distribution from the HSA that is made taxable by not applying it to qualified medical expenses is applied against excess contributions, Forms 1099-SA distributions after the due date of the tax return to correct excess contributions should always have code 1. Using code 2 to also indicate distributions of excess contributions after the due date of the tax return would make it impossible for the IRS to determine the taxability of the distribution."
That last part is what makes sense to me as to why Code 1 should be used instead of Code 2.
Now the fun part – trying to explain this to my HSA custodian!
