Question

HSA overfund--which remedy is best

Forum|Forum|5 years ago
February 10, 2021
1 reply
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I overpaid in my HSA in 2020 by about $400. From the 2 options--pay 6% penalty or withdraw the overage--how do I determine the best option taxwise?

ColeenD3

First of all, do you know for a fact that you overfunded or is the program telling your that. Please see this link: HSA.

If you really did overpay, you need to withdraw the excess.

Contributing more to your health savings account (HSA) than the IRS limit for the tax year is called an excess contribution. All excess contributions are subject to income tax and a 6% excise tax each year until corrected

D

dmertz

Employee

And correcting the excess after the due date of your 2020 tax return will subject the amount to double taxation and early-distribution penalties. You do not want to fail to request a return of excess contribution before the due date of your tax return.