Replace the $50 excesss hsa contribution

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mhalley
Posts: 6290
Joined: Tue Nov 20, 2007 6:02 am

Replace the $50 excesss hsa contribution

Post by mhalley » Sat Dec 08, 2018 3:55 pm

Like many, I maxed out my hsa early in the year, only to have the IRS decide that the limit was actually $50 less than the amount I contributed. So I filled out the form and withdrew the “excess” contribution, only to have the IRS say never mind, the $50 was ok. How will the hsa deal with it if I put the $50 back in? Will they just disregard the withdrawal and report that I maxed it out?

fujiters
Posts: 134
Joined: Tue Mar 06, 2018 2:17 pm

Re: Replace the $50 excesss hsa contribution

Post by fujiters » Sun Dec 09, 2018 4:53 am

You'll be fine. Put it in. The IRS said the original limit is acceptable.

But getting that $50 back into the HSA is not a huge deal. Compounding at 7% over 30 years, it'll only end up as $380, saving you about $100 in taxes if you use it for qualified medical expenses in 30 years at a 30% effective tax rate.
“The purpose of the margin of safety is to render the forecast unnecessary.” -Benjamin Graham

Alan S.
Posts: 7855
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: Replace the $50 excesss hsa contribution

Post by Alan S. » Sun Dec 09, 2018 2:42 pm

Here is the IRS Rev Procedure explaining your options: https://www.irs.gov/pub/irs-drop/rp-18-27.pdf

Note that if you received more than $50 due to gains when the excess contribution was processed, you can return those gains along with $50.

When you return the mistaken excess distribution and it's earnings, it will make your tax filing easier because the HSA custodian should then eliminate 1099 SA reporting of your earlier distribution, which saves you the trouble of reporting it on your return.

mhalley
Posts: 6290
Joined: Tue Nov 20, 2007 6:02 am

Re: Replace the $50 excesss hsa contribution

Post by mhalley » Sun Dec 09, 2018 3:31 pm

Thanks for the replies. I knew the dollar amount would be small, mainly wanted to make things as simple as possible.

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