Can I contribute to HSA without taking tax deduction to avoid penalty

[wlin]

My HSA account charges admin fee monthly if the cash balance is below a certain limit.  I am currently not on HSA eligible health plan, but I'd like to make one time contribution to avoid admin fee.

If I do not claim the after-tax dollars in my income deduction, will I still get the penalty? I just want to avoid the expensive admin fee...

[Mike9241]

sorry that's an excess contribution subject to a 6% annual penalty for each year the excess remains. you don't get a deduction in any case. besides the contribution is reported to the IRS so not filing form 8889 and showing the contribution will generate notices from the IRS. you may be able to move the a/c to a different HSA trustee which does not charge fees through a direct rollover or pay the 20% penalty and withdraw the funds for a nonqualified purpose if that makes economic sense.    

[dmertz]

Perhaps you can find an HSA custodian with a lower fee and do a trustee-to-trustee transfer of the balance.  However, the original HSA custodian might charge a fee for doing such a transfer, so you would have to factor that into any decision to move the HSA.