The HSA account is still open. I'm not sure what else we could have done. We consulted with our bank, when we discovered the error, and followed their instructions to remove the over-contribution, which left us with a $0 balance.
No one told us we had to wait for TurboTax and as long as the funds are withdrawn prior to 4/15 this is a moot point.
So, while this normally has a pretty simple resolution, the problem, is a January 2024 distribution (prior to knowledge of this error).
Now, on to the problem. This is all taking place in the "Deductions and Credits" section of TurboTax. Here's a step-by-step:
1) We filled out the required info where you state you had an HSA, but not a HDHP. So far, so good.
2) On the page "You may want to withdraw money from your HSAs" we appropriately select "We'll withdraw some of the excess contribution by April 15, 2024" and enter the amount we withdrew (which happens to be ALL of it).
3) On the page "What's the total value of all your HSAs?" we enter the amount we withdrew (which is the same as what's on the pertinent forms given by the bank).
4) The next few pages ask questions about 2022 which are all easily handled as that year was covered by a HDHP.
5) At the end of the process it says there is "1 Detail for you to review".
6) It has us check each month (covered by a HDHP for 2023) on form 8889-S (Line 3 Smart Worksheet) with either "None, Self-Only, or Family" to which we obviously answer "None" on each month.
7) This seems to be the correct approach, if I'm not mistaken, so thank you for this part of your response:
"When you have an excess contribution, you are encouraged to withdraw the entire amount of the excess by the due data of the return. When you can't, the balance becomes an excess contribution which carries over to the next year."
