I have a unique and tricky situation and am looking for an answer on how to calculate earnings attributable to excess contributions to an HSA. I have two HSA accounts:
- one at ABC Bank with a substantial balance. It was an account from an old employer from when I was younger. I do not contribute to it, nor do I withdrawal anything from it. It simply sits and earns interest/dividends.
- one HSA at XYZ Bank through my current employer
In 2023, I was eligible to contribute to the HSA through my current employer for 2 months. I switched healthcare plans from a HDHP to a different (non-HDHP) in March 2023. I made $475 of excess contributions to the XYZ HSA in 2023. However, because we had a lot of medical expenses in 2023, I spent the balance of the XYZ HSA account down to $0 by the end of 2023.
My understanding is, because I technically still have funds available in an HSA (via my ABC Bank HSA account) I still need to withdrawal $475 from my ABC Bank HSA - to correct the excess contribution. However, how do I calculate the earnings on the excess contributions given I spent the value of XYZ HSA down to $0 by year-end?
My understanding is earnings = excess contribution * ((AOB-ACB)/AOB)). Should I be calculating the Adjusted Opening and Adjusted Closing balance on the value of just the XYZ HSA, or should I calculate it on the balance of the ABC HSA - or the combination of both?
