IRA Distribution to HSA

[nschap13]

Why does TT not show a HSA funding option after I enter my 1099-R info for a HSA funding distribution???

I'm 59 years old, in a HDHP, and in 2020 I did a trustee-to-trustee distribution of $8100 from my IRA to my HSA. I'm married, retired, my wife and I have been in the same HDHP for over 3 years, and this was the only contribution to the HSA for the year. While going through the interview questions after entering my 1099-R information for the distribution, I do not get an option to indicate this is an HSA contribution, and thus the proper information on the 1040 line 4b is not indicated, i.e., "HFD" and $0 amount taxable. My 1099-R info is as follows: Boxes 1 and 2 = $8100; Box 2a "Taxable amount not determined" is checked; Box 7 Code is "1"; and the IRA/SEP/SIMPLE Box is checked.

This situation causes me to be penalized on the distribution which I don't believe is correct.

Additionally, when going through the HSA questions, TT indicates that my wife "had a break in HDHP coverage during 2020", which is incorrect. Is this related to my HFD problem?

[nschap13 · Accepted solution]

Well I answered this myself after re-reading the tax instructions. Distributions to a HSA from an IRA prior to age 59 1/2 are subject to the 10% tax penalty. Fortunately for me medical expenses will offset the tax penalty.