I contributed HSA until June with my employer. My Medicare Part A was "backdated" to March. What is IRS penalty on this social security benefit overlap?

[dsyhome0510]

can i avoid the penalty by withdrawing some money from HSA?

[dmertz]

If you were only an HSA-eligible individual for January and February, your HSA contributions for the year are limited to 2/12 of the regular annual limit for the type of HDHP coverage that you have, self-only or family.  Since you are over age 55, this would make your contribution limit for 2025 be $833.33 if you have self-only coverage or $1,591.67 if you have family coverage.  TurboTax will automatically calculate your maximum permissible contribution when you indicate the type of coverage that you had for each month.  (You would indicate Medicare coverage for March through December)

Contributions beyond that amount are subject to a 6% excess contribution penalty each year that the excess remains in the account.  To avoid the penalty you must request an explicit return of excess contribution (not an ordinary distribution) by the due date of your tax return for the year, including extensions.