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I made excess contribution withdraws from my HSA for contributions for 2018, but my HSA administrator processed it for 2019. They say they can't correcit it Is this okay?

They said that it won't matter that they can't give a corrected 5498-SA for 2018, but the 1099 sa for 2019 will show the withdraw and this should make the IRS happy. I'm just worried that because the 5498 shows the wrong amount and could cause an audit for 2018. Will this be okay with the IRS?
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3 Replies

I made excess contribution withdraws from my HSA for contributions for 2018, but my HSA administrator processed it for 2019. They say they can't correcit it Is this okay?

It is odd that they can't issue a corrected 5498-SA - the original 5498-SA is not even due until June 1 (although many HSA custodians have already mailed them).

No matter.

What we need to do is to make sure that your form 8889 is correct. When doing your 2018 return, TurboTax told you that you had excess contributions, and you (presumably) agreed to withdraw the whole amount of the excess before April 15th (it sounds like you did that).

This will be properly reflected on your form 8889, which the IRS will get a copy of.

Then, early next year (2020), when you are doing your 2019 return, you should receive a 1099-SA with a distribution code of '2' and the earnings made by the excess in box 2. You will enter this into TurboTax, and the earnings will be added to income in 2019 (as it should be).

So you will have done everything correctly on the tax side. If the 5498-SA forms for 2018 and 2019 don't exactly match the other forms, don't worry. While it's fresh in your mind, write down what happened and stick it in your tax file along with any communications from the HSA custodian. Then, if the IRS ever expresses its curiosity about the forms, you can answer the letter by pointing out what happened and how the HSA custodian made a paperwork mistake that they declined to correct.

Since you will have obviously paid the correct tax, I think the IRS will drop the matter.

I made excess contribution withdraws from my HSA for contributions for 2018, but my HSA administrator processed it for 2019. They say they can't correcit it Is this okay?

Thanks. That is helpful. What I notice now is that after entering it all into TurboTax (Desktop) it adjusted line 14a on the 8889. I would have thought it would have added the withdraw to line 14b. Does that seem correct?

I made excess contribution withdraws from my HSA for contributions for 2018, but my HSA administrator processed it for 2019. They say they can't correcit it Is this okay?

Are you saying that you entered a 1099-SA to your 2018 return? What was it for, a regular distribution? Or have you already received a 1099-SA with a distribution code of '2'? The amount in box 1 of that 1099-SA will go in line 14b.
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