topic Where can I find details on the tax penalty associated with making HSA contributions while under Medicare coverage? in Get your taxes done using TurboTax

Where can I find details on the tax penalty associated with making HSA contributions while under Medicare coverage?

brunerwr — Sat, 16 Nov 2019 20:19:55 GMT

Re: Where can I find details on the tax penalty associated with making HSA contributions while under Medicare coverage?

ghost — Sat, 16 Nov 2019 20:57:53 GMT

You can review the IRS publication 969. https://www.irs.gov/publications/p969

Basically, you should contact the account custodian to withdraw any contribution in excess on the amount allowed in order to avoid a 6% penalty. You must be clear that you are requesting a return of excess contribution. Do not make a normal withdraw as that will not provide the desired result of lowering your contribution. You must withdraw the excess before the tax filing deadline (typically April 15). Do you have a specific question regarding this subject?

Re: Where can I find details on the tax penalty associated with making HSA contributions while under Medicare coverage?

Anonymous — Sun, 17 Nov 2019 00:52:48 GMT

Under section 223, the amount of the maximum HSA contribution deduction in the year
an individual reaches age 65 is prorated based on the number of months that the
individual is an eligible individual. In particular, the maximum contribution is based on
the number of months that the person in not enrolled in Medicare.

so if you enroll in medicare effective in September you could make and HSA contribution including catch up amount for 8 months (8/12 of the maximum for the year)

the rules are somewhat different if you are married and have family coverage

them the maximum for family coverage need s to be prorate IRS INFO 2016-0014

if married and each has separate coverage. the maximum is computed separately for each. so if one was covered by medicare but not the other, the one not covered by medicare could make the maximum contribution while the one covered would be limited.

as explained any excess including earnings thereon not withdrawn by the due date of the return including extensions is subject to a 6% penalty each year not withdrawn.