Contact your H.S.A. administrator. The IRS is lenient on fixing excess HSA contributions. They provide two options of correction: removal or future application.
Option 1: The first removes the HSA contributions in the tax year and avoids a penalty – no harm, no foul. You may withdraw some or all of the excess contributions and not pay the excise tax on the amount withdrawn if you meet the following conditions.
1) You withdraw the excess contributions by the due date, including extensions, of your tax return for the year the contributions were made.
2) You withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings.
Option 2: Alternatively, you can use an
excess contribution as your HSA contribution in a future year. You just let your excess contribution sit and then apply it later; the downside is
there is a 6% per year penalty. The mechanism that allows this is the deduction, since next year you won’t actually deposit the contribution (it is already there), you will just deduct it on Form 8889. As an example, if you have excess contributions in 2016, you can let them sit there until 2017 and then use them as your contribution for 2017. Rolling an excess contribution to a future year is allowed per the IRS Form 969:
You may be able to deduct excess contributions for previous years that are still in your HSA. The excess contribution you can deduct for the current year is the lesser of the following two amounts:
1) Your maximum HSA contribution limit for the year minus any amounts contributed to your HSA for the year.
2) The total excess contributions in your HSA at the beginning of the year.
To read the whole article, click on How to Remove Excess Contributions to an HSA | HSA Edge
