IRA to HSA rollover

[RMGl]

I am retired and on Medicare. I transferred money from my IRA to my HSA through my financial institution. I didn't realize that I could not do this until after a few days after the rollover was complete, at which time I had the money transferred from my HSA back into my my IRA. I thought that was all I needed to do.

Today I received a 1099-SA from the institution where my HAS is stating I had a Gross distibution coded as Excess contribution. I don’t have my 1099 from the institution when my IRA is.

My financial institutions probably should have caught this, but they did not.

My question is have I inadvertently created a tax liability?

[dmertz]

I assume that you are age 59½ or over.  If you haven't already, you'll be receiving a code 7 2019 Form 1099-R with the IRA/SEP/SIMPLE box marked for the distribution from the traditional IRA.  When you enter this Form 1099-R, indicate that you moved the money to another retirement account and that you rolled over the money.  When asked to indicate the amount rolled over, indicate the amount moved back to the IRA, but not to exceed the amount originally distributed, shown in box 1 the Form 1099-R.  TurboTax will include on line 4a of Form 1040 the amount distributed, but will exclude from line 4b the amount rolled back to the IRA.  TurboTax will also include the word ROLLOVER next to the line.

If the 2019 Form 1099-SA that you already received has a taxable amount in box 2 and that amount was included in the amount transferred back to the traditional IRA, the box 2 amount represents a new, regular contribution to your traditional IRA and will be an excess contribution subject to penalty if you are ineligible to make that contribution.

[RMGl]

My problem is not with the rollover from my IRA. My financial guy was able to reverse the rollover so it did not show up on my 1099-R.

The problem was with the institution where I have my HSA. I had the money transferred back to my financial institution so the 1099-R from my HSA shows the rollover and subsequent reversal as an excess contribution (code 2). If I am doing my taxes correctly it looks like if I remove that money from my HSA before April 15th, which I have already done, there will be no tax liability.  I think it is all okay now

Thank you for taking the time to respond to my question.

[dmertz · Accepted solution]

So it just looks like you made a personal contribution to the HSA from which you obtained a return of excess contribution.  That's fine.  Just be sure to enter the Form 1099-SA.