HSA account closed. No 1099-SA issued.

[fazeredo]

My HSA account was closed and the balance sent to the state as unclaimed income. The HSA administrator did not issue a 1099-SA. How should I handle this for the current year tax return?

[dmertz]

The rules for HSA distributions largely mirror those for IRA distributions.  When an IRA is escheated to the state, the IRA custodian is required to report the distribution on Form 1099-R.  One would think that the rule for HSAs would be essentially the same with the HSA custodian being required to report the distribution on Form 1099-SA.

Normally you would prepare Form 8889 Part II to report this as a distribution.  To do this in TurboTax you would have to enter a Form 1099-SA as if you had received one.  With no tax withholding, the form itself that you entered won't be included in your e-filing, the information will only be used to populate Form 8889 Part II.

In the case of escheatment of an IRA one can self-certify under IRS Rev. Proc. 2020-46 that the distribution would qualify for a waiver of the 60-day rollover deadline.  One would think that an HSA distribution made under similar circumstances would also qualify for self-certification to be able to complete a late rollover.

[HelenC12]

If the HSA account was closed, your HSA administrator should have issued you a 1099-SA form in the year it was closed. Check your online account HSA account and look for Tax Forms or year-end forms. 

• Otherwise, contact your plan administrator. 
• You may also be able to get the 1099-SA form on the IRS website. You'll need to get an IRS transcript of your account, in particular the Wage and Income Transcript. 

If you paid qualified medical costs for the year of the distribution, you could file Form 8889 to avoid the reported distribution being subject to tax and the 20% penalty. 

Additional information: Where do I enter my 1099-SA?