I have an excess contribution from a prior year (2020) which I have finally corrected in 2023, resulting in a 1099-SA with distribution code 2. I'm concerned that this is not being handled correctly.
Because this is an 'excess contribution' that was withdrawn 'before the due date', on form 8889 the distribution is subtracted from the contribution, meaning line 16 is 0, meaning on form 5329, I cannot subtract my withdrawal from my contributions.
Also, it seems as though distribution code 2 causes TurboTax to handle some aspects of the HSA advisor automatically - I cannot list this as a normal distribution and pay the penalty.
I think this may mean I will be stuck in a perpetual loop every year with this excess amount. How can I fix this?
