Your HSA can be used now, the following years or even when you're retired.
One of the great advantages of an HSA is that you’re not required to take money out of it by any given date, you can save and may even be able to invest your balance until you need it.
Even if you leave the employer that originally sponsored your HSA, you can keep that HSA, or transfer or roll the balance over to another HSA — one offered by your new employer or an HSA you open yourself.
Also, distributions from an HSA that are used to pay qualified medical expenses aren’t taxed.
However, if you overfunded or weren't eligible to contribute to your HSA in 2023, you'll need to withdraw the excess amount by April 15, 2024 to avoid a penalty (October 15 if you filed an extension).
These withdrawals will be considered taxable income.
You also need to take out any income earned on the withdrawn contributions during the year they were made. This will also be taxable income.
For 2023, the maximum combined total that you, your employer, and/or any other eligible person can contribute to your HSA account is: $3,850 if you're under 55 at the end of 2023 and are covered by an individual (self-only) HDHP;
The above limit is prorated depending on the number of months you were covered by an HDHP and had no additional health coverage.
Your HSA contribution is reported in box 12 of your W-2 with the code W.
Code W reports the combined HSA contributions from you and your employer. Don't report that amount again on your return. That will cause excess contribution on your return.
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