How to compute Excess HSA for contributions after turning 65 in 2017. (Please see the comments and extended question for more detailed question.)

[samidavies]

Modified question.

Actual:

I have family HDHP with HSA allowable contributions of $7,750 for 2017 if I did not turn 65.

However, 

I signed up for Medicare starting June 2017 (turned 65 on June 27, 2017)

Jan - May 2017, I contributed less than 5/12 of my allowable HSA Max allowed contributions

Jun - Dec, I continued contributing to HSA, making it more than 5/12 of my allowable HSA Max Allowed contributions. (In fact about 95% of my max)

Thus: I do have Excess HSA contributions.

Question:

Are any of the Jun - Dec 2017 HSA contributions allowed or are only the actual Jan - May 2017 contributions allowed?

Example:

Jan - May I contributed $2,000.00 to HSA + Employer matched $200 for a total Jan - May HSA contribution of $2,200.00.

5/12 * $7,750 = $3,229.17, i.e.I contributed $1,029.17 less than (5/12 * $7,750).

Jun - Dec I contributed $7,000.

Example Questions:

In this example, do I need to submit an Excess HSA Withdrawal for $4,800 or for $3,770.83?

I hope this clarifies my question.

Thank you in advance, Sami

[Opus 17 · Accepted solution]

It's not age, but joining medicare (which is usually at 65 but not always.)

If you enrolled in Medicare, then leaving the excess contributions in the account will result in income tax plus a 6% penalty, plus a further 6% penalty in every year after this until the account is emptied.

To withdraw the excess amount (plus their earnings) make sure to tell the HSA provider you need to make a withdrawal of excess contributions.  There may be extra paperwork to fill out. If you make a regular withdrawal, it won't count.

[samidavies]

Hi Opus, I added clarification information to my question.

[Opus 17]

Your max allowable contributions for the tax year are $3229, even if some of that $3229 was contributed after June.

[samidavies]

Thank you ever so much Opus 17!