HSA excess contribution - insufficient funds

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waterwell
Posts: 26
Joined: Sun Aug 17, 2014 7:12 am

HSA excess contribution - insufficient funds

Post by waterwell »

My mom was on Medicare in 2020 but her employer contributed $500 to her HSA. During 2020, $575 was distributed from the HSA and the balance is currently 0.

The 500 is an excess contribution (because the contribution limit was 0) but the funds have already been withdrawn. My mother contacted the HSA administrator in 2021 and said they would correct the 2020 1099-SA to show a distribution of 75. Then for 2021 they will provide a 1099-SA showing a 500 distribution of an excess contribution.

How does she report this on her 2020 tax return?

Is she subject to the 6% penalty for 2020 because the 2021 1099-SA will show the distribution of the excess contribution?
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