Withdrew excess HSA contribution early in year - still counted as excess contribution?

Forum|Forum|2 years ago
March 3, 2024
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I accidentally contributed too much to my HSA in 2023, which I withdrew in September 2023 to get be back to the limit. I received 2 1099-SA forms, one for my total overall contribution and one for my excess contribution.

I entered both forms into TurboTax, and now it shows my total contribution as the full number inclusive of the excess that was withdrawn earlier in the year. Will I be penalized even though the excess was already removed?

TurboTax Premier Online

Best answer by DawnC

You wouldn't get the prompt because the distribution code told TurboTax that you removed the excess. The excess funds that were withdrawn will be listed on Form 1099-SA as a distribution, in Box 1, for the tax year in which the distribution was taken. Earnings on excess contributions withdrawn will be in Box 2 and included in Box 1.

To verify you are not penalized for that entry, look for Form 5329 in your return. If you were penalized, the penalty would show up on Line 8 of Schedule 2.

PatriciaV

Employee

You have the option to exclude the excess contribution because you removed the excess before the end of 2023.

Or TurboTax can do it for you. Return to the HSA topic and work through the interview until you come to the page "You may want to withdraw money from your HSA." Check the box for "I'll withdraw the full excess contribution by April 15." This removes the excess and the associated penalty.

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crussAuthor

Thanks! Based on googling, that’s what I expected to do, but I never got to that page. I went through everything up through the final review but couldn’t find it.

I received one 1099-SA with the Normal Distribution code, and another with the Excess contribution code. I put both in TurboTax and went through all the prompts, but did not end up on a page where I could note that the excess had been removed.

DawnCAnswer

Employee

To verify you are not penalized for that entry, look for Form 5329 in your return. If you were penalized, the penalty would show up on Line 8 of Schedule 2.

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