HSA Overcontribution by New Employer - Need to Fix?

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KingRiggs
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HSA Overcontribution by New Employer - Need to Fix?

Post by KingRiggs »

For the first nine months of 2021, I was a K-1 partner in a medical practice. As such, I funded my HSA early in the year to the legal limit (including age catch-ups for spouse and me).

In September, our medical practice was acquired by a health network, and I changed to a W-2 employee for the first time in 25 years. Somehow, in setting up my employment benefits, the employer made a contribution to a new HSA in the amount of $3.76, despite the fact that I believed that I had waived any contributions for the remainder or 2021. (Still trying to figure out why this happened...HR less than helpful).

So I find myself $3.76 over-contributed for 2021. So what now? Do I need to pursue a return of the contribution via the new HSA provider or my HR Department? Or do I just forget it, hope for no audits, and deal with whatever happens if it comes to the attention of the IRS?

Thanks in advance for any words of wisdom!
Advice = noun | Advise = verb | | Roth, not ROTH | | "Remember, there's always money in the banana stand." - George Bluth, Sr.
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grabiner
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Re: HSA Overcontribution by New Employer - Need to Fix?

Post by grabiner »

You will need to report the excess contribution on Form 5329 if you don't remove it. However, for a small contribution, it would probably be simpler to just file Form 5329 and pay the penalty; the penalty on a $3.76 overcontribution rounds to zero. You can then fix things next year by contributing $4 less than the IRS limit.
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KingRiggs
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Location: Indiana

Re: HSA Overcontribution by New Employer - Need to Fix?

Post by KingRiggs »

Thanks for the reply. Sounds like the easiest approach is just file the form and pay the (very small) tax/penalty. I assume this is done with my 2021 filing next April.
Advice = noun | Advise = verb | | Roth, not ROTH | | "Remember, there's always money in the banana stand." - George Bluth, Sr.
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