In late 2023 I got my notice of excess contributions from my employer for $4,850 and the appropriate form.
I retired as of December 31 2023, and received vacation and bonus payouts, as well as a$500 addition to my HSA from my employer. I was covered by my employers retiree health insurance plan at this time.
In February, before I had a chance to do my taxes, I was in the hospital for a month, and did not get taxes going until I returned at the end of March, and I did not get a chance to remove the funds before the deadline. My total in the HSA was $24,806.
In March, I turned 65, and due to an error on my part in getting Medicare Part D so that my employer Medicare PPO would kick in, I was not covered for the month of March with ANY insurance. During that month, I accrued over $50,000 in medical bills. In May (after getting the statements for my care) I used the funds from my HSA, plus savings, to pay down the bill. There were zero funds left in the account at this point.
While doing my taxes this year, my 2024 1099-SA shows my gross distribution of $24,806 in box 1, $0 earnings in excess in box 2 While doing my 2024 taxes, and filling in the section for 1099-SA, it showed my maximum contribution limit to be $858, and pulled my $4,850 over from my 2023 return, and gave me a new excess contribution total of $4,492 that will be charged at 6%.
I do not see a selection that handles my situation in the sections below asking how I would like to handle the situation:
1 - Withdraw the excess contritbution by April 15th: There is nothing left to withdraw.
2 - Withdraw some of the excess contribution by April 15th: See above
3 - No, I'm not going to make this withdrawal: which is true, but implies I HAD a choice!
What I believe I need is an option 4 - All funds were used for medical necessity during 2024 with no funds remaining!
Do I just go ahead and use option 3? Not really sure where to go from here on the HSA item.
