Since I posted my initial question, a few things have happened. My daughter contacted her employer's HR department and was told they would reverse the $300 contribution and issue her a corrected W-2. So we filed an extension in order to wait for the W-2 (c). Turned out it never came and after a few back and forth with both the HR and Benefits departments, they decided not to do anything. In the meantime, we received the 5498-SA form from the HSA bank, stating the $300 contribution and the FMV ($288 due to $12 fees) of the account.
Questions:
(1) Can I still remove the excess contribution and designate the distribution for tax year 2023 since we filed an extension? If the HSA bank can accommodate us to designate it for 2023, then what distribution code should this be on the 1099-SA form? Does she also get a corrected 5498-SA? Also, the distribution amount won't be the same as the $300 contribution on her W-2, but I just add the $300 as "Other Income" to the 1040.
(2) Let's say the HSA bank does not agree to put the distribution under 2023, and my daughter won't be eligible to have an HDHP for a few more years, what is the best and fastest way to resolve this and dissolve the account?
Any help would be much appreciated.
