After the due date of the tax return for the year for which the excess HSA contribution was made, the excess is only permitted be removed by obtaining an ordinary code-1 distribution of the exact amount of the excess made taxable by not applying it to medical expenses. A code-2 distribution is only permitted to be made to correct an excess contribution before the due date of the tax return for the year for which the excess contribution was made. This means that the code-2 2024 Form 1099-R can only be reporting a corrective distribution of a contribution made for 2023 or 2024. If you made no HSA contribution for 2023 or 2024, the HSA custodian should have refused to process a code-2 distribution in 2024.
