If this is the case (no mistaken distribution), then your plan to split the 1099-SA has some up sides and downsides.
If you enter for the 2026 tax year (i.e., next year) two 1099-SAs, one with ...
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If this is the case (no mistaken distribution), then your plan to split the 1099-SA has some up sides and downsides.
If you enter for the 2026 tax year (i.e., next year) two 1099-SAs, one with dist code of '1' and $3,350 as the distribution and earnings reduced by the prorated amount of 1450/3550, and the second 1099-SA with a distribution code of '2', the distribution equal to 1,450 and the earnings being whatever you didn't report on the first 1099-SA, there are the Pros and Cons:
Pros:
This is exactly what should have happened - and you can tell that to any auditor.
Your tax numbers on the return are correct, in terms of income tax and penalties on the 5329.
Cons:
When you change a filed form (i.e., one copied to the IRS like the 1099-SA is), you increase the risk of getting a letter from the IRS.
However, the letter from the IRS is more a point of curiosity on their part - they are saying "we think this is the right tax, but would you please explain the difference?" It is not an accusation of wrong behavior.
Just document what you did and why you had to split the 1099-SA that you will receive (I guess you haven't received the $5,000 1099-SA yet, right?), and save it in your tax file in case anyone ever asks.
Do the right thing, and don't fret over it.