When I was doing my tax return, a message pops suggesting to withdraw from my HSA.

[cb0202]

Hello, I was hoping if someone can assist and answer this issue. When I was doing my tax return in turbotax last month, there's a part that show need to withdraw my HSA before April to avoid penalty. However, I already received my tax return and no other problem with it. I was just worried about the note before when I was doing/filing my tax return.

I already called Fidelity to confirm this however they said that upon checking my account I don't have the excess amount so they're not sure why it shows it needs to be withdraw. What should I do? Do I just ignore the message that pops out or I need to withdraw it?

Thanks and hoping for a accurate response.

[BillM223]

I am puzzled why you seem to say that you had already received your return (I assume you meant "refund"), and then you got this message about withdrawing some amount from your HSA. Perhaps you did not mean this.

Fidelity has no way of knowing if you made excess contributions to your HSA. They think they do, but they don't. All they know is the simple case for calculating your annual HSA contribution limit, but they don't know several other factors that could affect the limit, which they can't know.

May I assume that you have a copy of your return? What is in line 8f on Schedule 1, form 8889? 

To be clear, TurboTax would have asked you to withdraw your excess contributions to your HSA by April 15th. You having excess contributions would have automatically triggered adding this excess (if the contributions were on your W-2) to line 8f on Schedule 1 (1040). 

If you told TurboTax that you were not going to withdraw all the excess, then TurboTax would also generate form 5329. In Part VII, do you have an amount on line 47?

Let us know, because if you told TurboTax that you would remove the excess by April 15th, you really need to do it. Correcting it later can get very expensive.

[Opus 17]

While there is a universal maximum contribution, your personal contribution depends on the kind of insurance you had for each of the 12 months.   If your insurance coverage was not correct, and you had an excess contribution and did not remove it, you should have been charged income tax and a penalty.  Check form 8889 and 5329 included with your tax return.

If you paid a penalty, that can be reversed and you can get that refunded to you by making a special corrective withdrawal from the HSA account before April 15.

We would need a lot more details to help you though. 

[cb0202]

Hello, thanks for responding. Upon checking my 1040 form tax,it just shows 8f as 350 as well on the 8889 form on line 8. 

So, does it mean I can withdraw the 350?

[cb0202]

Hello, thanks for your response. Upon checking on 8889 form it only shows 350 in line 9 and 11. I don't see 5329 form. 

[BillM223]

Possibly,

The line 8f on Schedule 1 (1040) shows the amount of contributions through your employer (code W in box 12 on your W-2) that was in excess. 

If you had no 5329, that means that there is no contribution carryover, which means that you said that you would withdraw the entire excess.\ rather than carry it over.

Since we know that the excess was $350, this is the amount you should tell your HSA custodian you want to make a "withdrawal of excess contributions: (use this exact phrase). Note that many HSA custodians will have online forms for this.

Thank you for pursuing this, you will be happy that you did.

[Opus 17]

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@cb0202 wrote:

Hello, thanks for responding. Upon checking my 1040 form tax,it just shows 8f as 350 as well on the 8889 form on line 8. 

So, does it mean I can withdraw the 350?

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If you actually have an excess, and told the IRS you would remove it, but then you don't remove it, you can be subject to penalties for every year that the excess remains in the account.

[cb0202]

Yes, when I checked on my W2 it shows on line 13, "Ret.plan" there was an X noted. Not sure, if that's what it means.

Just want to make sure and finalize that I can just withdraw the $350 in my HSA using the Fidelity debit card?

Because that's what I'm worried about: if it's okay to withdraw the $350 from HSA, which it shows during the process of my tax return through TurboTax.

[cb0202]

When I called the IRS, they also didn't know, and the TurboTax representative also advised me to call Fidelity, but when I called Fidelity, they also didn't know and told me to call the IRS. That's why I saw this forum and was just wondering if maybe someone can help me with this issue. I only worried about withdrawing the $350, which was notified when I was doing my tax return on Turbotax. However, I haven't received a letter or note after I finished and submitted my tax return about an error on HSA. 

So, just want to make sure if I should still withdraw it because I don't want to have a penalty on it. Thanks

[Opus 17]

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@cb0202 wrote:

Yes, when I checked on my W2 it shows on line 13, "Ret.plan" there was an X noted. Not sure, if that's what it means.

Just want to make sure and finalize that I can just withdraw the $350 in my HSA using the Fidelity debit card?

Because that's what I'm worried about: if it's okay to withdraw the $350 from HSA, which it shows during the process of my tax return through TurboTax.

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No.  The removal of an excess contribution is a special procedure, not a regular withdrawal.  Contact the HSA bank, or check their web site, there is probably a special form.  This must be done by April 15.  The HSA bank must also return to you any earnings that are attributable to the excess contribution (they already know this procedure and should do it automatically) and those earnings are taxable on your 2024 return, even though they are actually paid in 2025, because they are attributed to ineligible 2024 contributions.

If you just have your HSA funds in a simple bank account, it might only be a tiny amount of interest.  If less than $5, the IRS will probably let you get away with not reporting it.   If more than $5, you should probably file an amended 2024 return to report the extra income and pay any extra tax, if owed.  The attributed income is reported as "other" or "miscellaneous" income not on a 1099.  

[cb0202]

Got it. Thank you for your help. Just wondering, do you know where I can contact the HSA, such as their website and contact number? Sorry, I'm new to this. Because when I searched on Google, there's no specific contact for HSA.

[Opus 17]

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@cb0202 wrote:

Got it. Thank you for your help. Just wondering, do you know where I can contact the HSA, such as their website and contact number? Sorry, I'm new to this. Because when I searched on Google, there's no specific contact for HSA.

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That's on you.  I don;t know the phone numbers or web sites of thousands of banks.  How do you withdraw funds?  Web site? Bank card?  App?  The contact information should be there.  If this is an employer-sponsored account, ask your employer.

[cb0202]

Thanks for your help. I already talked to HSA representative and withdraw the excess.