Hsa excess contribution

Forum|Forum|2 years ago
March 1, 2024
4 replies
68 views

I had an excess hsa contribution for 2023. I went to HSA Bank and determined the total to be 5136.95. So I requested a refund of 287.

I am doing my taxes and the excess amount is showing as 237. I tried to put in the 287 but it complained. If I put it at 237 are there going to be issues with my return? Or will it affect the 2024 return?

BillM223

Level 15

TurboTax has determined that your excess HSA contribution for 2023 was $237. The IRS does not permit you to withdraw willy-nilly contributions that were in excess of this, with the exception of earnings on the excess while it was in the HSA. (the HSA custodian should be able to tell you this).

First, did you tell the HSA custodian that this request was for a "withdrawal of excess HSA contributions" using this phrase? If not, you already have an issue.

Second, "I went to HSA Bank and determined the total to be 5136.95." This is not the right procedure. the HSA custodian doesn't have all the information to correctly determine the amount of the excess. They might think they do, but they don't. TurboTax does because it asks you all the right questions.

Since your excess was $237 but you withdrew $287, then you should contact the HSA custodian, and ask for the paper work to report a Mistaken Distribution (the form may be online). The $237 was correct to withdraw as excess contributions, but you should not have withdrawn the extra $50. If you don't get the custodian to reverse that withdrawal, then you will have to report that $50 as a distribution for other than medical expenses, which will not only be added to your income but will also trigger a 20% penalty.

Simply put, your HSA is not a savings account that you can willy-nilly take money out of. There are procedures that govern this, and because HSA are such a good tax benefit, the IRS wants you to be careful about what you do with the money.

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KET33Author

Level 2

Thank you for the guidance! The HSA custodian was not able to give me any information about the excess or earnings when I contacted them about this. The 2023 contributions shown on the account were what I used. I will contact them about the incorrect amount. Thanks again!

Mike9241

Level 15

We don't know how much you contributed for 2023 nor what month you became ineligible. also if over 55 that would affect the amount of allowable contributions. Most likely TurboTax is correct.

with family coverage not over 55 the prorata monthly allowable amount is $645.83. lf over 55 the amount is $729.17/month

the amount Turbotax specified as excess was on the contribution amount. you also needed to withdraw earnings thereon.

you must show the $237 withdrawal in 2023 (even if done in 2024 to avoid the overcontribution penalty). any earnings get taxed in 2024. you will receive form 5498-SA for the withdrawal. That excess will be a problem in 2024 since it would be a nonqualified withdrawal taxed as income and subject to penalty.

Mike9241