If I contributed $2250.00 to my HSA & Turbotax says I must withdraw balance by 4/15/19 or pay 6% but HSA mgr says I can't withdraw if not used for med so who is right?

Scottdds32 · ‎June 3, 2019

I contributed $2250. in 2018 to my HSA; The balance is $2150.00 I called the bank organization that manages the HSA for my company and was told I cannot withdraw anything. That no one can simply withdraw without using it for medical purposes. Yet TurboTax unequivocably tells me I will be taxed 6% on this balance if I do not withdraw it by April 15, 2019. I am totally confused and do not understand. My company does not match my contributions to my HSA. What next?

dmertz · ‎June 3, 2019

"That no one can simply withdraw without using it for medical purposes"

That's completely false. Either the HSA rep is misinformed or you interpreted the rep's information incorrectly. You are permitted to receive a Return of Excess Contribution of your 2018 contribution to your HSA before the due date of your 2018 tax return, but only if your contribution actually was an excess contribution. Assuming that you've entered all of the information into TurboTax for TurboTax to properly determine that you made an excess contribution, call the HSA custodian back and explain again that you made an excess contribution from 2018 that needs to be returned.

If your contribution was not an excess contribution, or if the excess contribution was a contribution for 2017, the money can only be distributed from the HSA by a regular distribution. If the regular distribution is not applied to medical expenses, the regular distribution is subject to income tax and an early-distribution penalty. If you are correcting an excess contribution made for 2017, the excess must be corrected by obtaining a regular distribution and not using it for medical expenses.

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If I contributed $2250.00 to my HSA &amp; Turbotax says I must withdraw balance by 4/15/19 or pay 6% but HSA mgr says I can't withdraw if not used for med so who is right?

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If I contributed $2250.00 to my HSA & Turbotax says I must withdraw balance by 4/15/19 or pay 6% but HSA mgr says I can't withdraw if not used for med so who is right?