I have 2 HSA accounts (For the same year…). How do I fix?

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Fictionme
Posts: 33
Joined: Thu Jan 25, 2018 9:06 am

I have 2 HSA accounts (For the same year…). How do I fix?

Post by Fictionme »

:confused Here is the situation

My company uses ADP to manage our payroll. For one or two years ADP withdrew the maximum annual family limit for HSA account and sent the money to Optum. Separately my company opened a HSA in my name and sent the same deduction over to Optum (in my name). So in Optum’s eyes I have 2 HSA accounts, albeit with maximum contributions from the same tax year. They have offered to merge the accounts (I am not sure this is legal from a tax perspective so I have yet to take any action). Since I believe this spans more than one year, and I’ve already filed/paid taxes for 2023 I don’t think I can remove the money. I have read a bit on using the excess contribution to apply to future years, but I have already contributed the maximum for 2024 (we superfund it early on before I realized this).

What should I tell my CPA? I thought about just having Optum merge the two accounts but then I read about the 6% excise tax that compounds yearly.
nalor511
Posts: 5325
Joined: Mon Jul 27, 2015 1:00 am

Re: I have 2 HSA accounts (For the same year…). How do I fix?

Post by nalor511 »

It doesn't matter if you have two accounts. It matters if you double contributed. You need to have the custodian reverse one set of contributions if you did two
Topic Author
Fictionme
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Joined: Thu Jan 25, 2018 9:06 am

Re: I have 2 HSA accounts (For the same year…). How do I fix?

Post by Fictionme »

Yes. Double contributions for the same tax year. Has anyone dealt with this situation?
toddthebod
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Joined: Wed May 18, 2022 12:42 pm

Re: I have 2 HSA accounts (For the same year…). How do I fix?

Post by toddthebod »

Fictionme wrote: Tue May 14, 2024 1:35 pm Yes. Double contributions for the same tax year. Has anyone dealt with this situation?
Reverse the 2024 contributions. File form 5329 for 2023 and pay the excise tax (no need to amend, you can file standalone). Only contribute the difference between this year's limit and last year's limit for 2024. File form 5329 again with your 2024 taxes showing that you have absorbed the contributions under this year's limit.
Topic Author
Fictionme
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Joined: Thu Jan 25, 2018 9:06 am

Re: I have 2 HSA accounts (For the same year…). How do I fix?

Post by Fictionme »

hypothetically if I merge these two accounts without filing any forms what risk am I incurring?
toddthebod
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Joined: Wed May 18, 2022 12:42 pm

Re: I have 2 HSA accounts (For the same year…). How do I fix?

Post by toddthebod »

Fictionme wrote: Thu May 16, 2024 6:18 pm hypothetically if I merge these two accounts without filing any forms what risk am I incurring?
The custodians file Form 5498-SA with the IRS reporting your contributions. The IRS adds up the two forms and sees that it exceeds the limit for the year. They send you a bill for the excise tax along with interest and penalties.
TheGuru1
Posts: 73
Joined: Sat Dec 05, 2009 10:18 am

Re: I have 2 HSA accounts (For the same year…). How do I fix?

Post by TheGuru1 »

If possible, remove the 2024 contributions. Apply the excess 2023 contributions to Tax Year 2024 as Tax Year 2024 contributions. May have to be done on Form 8889 for 2023. Not sure.
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