Can I leave in place a HSA excess contribution made in 2016, and not fund the 2017HSA to the limit. And thus between 2016 and 2017 years, I would not be above limt

[mnop87-]

Do i have to Withdraw the excess made in 2016, OR can i underfund the 2017 contribution to make up for the excess in prior year?

[BMcCalpin]

Yes. If you decide to carry over the excess contribution to 2017 by not withdrawing it, this is what will happen:

1. You will be charged a 6% excise tax on the amount carried over.

2. You need to reduce your contribution limit for 2017 by the amount of the carryover, which normally means that you have to work with the HR department to get the amount of employer and/or your contribution by means of payroll deduction reduced by that amount for the year.

3. If you continue to contribute at the same rate as 2016, then the carryover will carryover to 2018, and you will be dinged 6% every year until you up the carryover by not contributing so much.