I made excess contributions to my HSA...how do I correct the mistake?
HSA’s have maximum contributions that carry penalties if you exceed the allowable amounts.
The good news is you can correct the mistake to avoid negative financial ramifications. This is done by removing the excess amount (including earnings from the excess contributions) before your tax return is filed. This allows you to avoid including the excess contribution in your taxable income and eliminates penalties.
To remove excess contributions, you can either correct the error with your employer, or with the HSA administrator.
If correcting through the HSA administrator, you’ll want to inform them you’d like to complete a distribution for an Excess Contribution Removal. You’ll then receive a 1099-SA form reflecting the correction.
If you made the excess contribution through your employer via a pre-tax payroll deduction, you’ll need to work directly with your employer to fix the issue. Your employer should then make the changes and issue you a corrected W2.
Once the corrections are made, provide your tax preparer with the updated tax forms.
The good news is you can correct the mistake to avoid negative financial ramifications. This is done by removing the excess amount (including earnings from the excess contributions) before your tax return is filed. This allows you to avoid including the excess contribution in your taxable income and eliminates penalties.
To remove excess contributions, you can either correct the error with your employer, or with the HSA administrator.
If correcting through the HSA administrator, you’ll want to inform them you’d like to complete a distribution for an Excess Contribution Removal. You’ll then receive a 1099-SA form reflecting the correction.
If you made the excess contribution through your employer via a pre-tax payroll deduction, you’ll need to work directly with your employer to fix the issue. Your employer should then make the changes and issue you a corrected W2.
Once the corrections are made, provide your tax preparer with the updated tax forms.
