dmertz
Level 15

Retirement tax questions

Since you are ineligible for HSA contributions, the company should not be making any contribution to your HSA.  You must inform your employer that you are ineligible for HSA contributions.  Since your wife is eligible for an HSA contribution, the employer can make contributions to your wife's HSA, but not you your HSA.

 

If money (other than a rollover) is deposited to the HSA of an individual who is ineligible for an HSA contribution, the contribution is an excess contribution subject to a 6% excess contribution penalty on the excess each year that the excess remains in the account.  To avoid any penalties, the excess can be removed by explicitly asking the HSA custodian to make a return of excess contribution prior to the due date of the tax return for the year for which the contribution was made.  Since an employer contribution would have been excluded from your wages in box 1 of your W-2, the excess returned will be added to your taxable income for the year of the contribution.  To resolve the excess after the due date of your tax return you would have to make a taxable distribution from the HSA, resulting in double taxation of this money.

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