Question

How to withdraw excess HSA contribution from prior years

Forum|Forum|4 years ago
April 14, 2022
1 reply
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I would like to withdraw my excess HSA contribution (from prior year(s) - the excess has been showing up since 2014, and I've been paying the 6% penalty each year), but do not know how to enter the information in TurboTax.

-I'd like get this off my taxes & stop paying the penalty. I am willing to withdraw the excess contribution as "unqualified distribution" and pay the 20% penalty, but Turbo Tax won't allow as it is from a prior year.

-Another option seems to be to spend down an entire HSA account & deplete to 0, which I could do (I have medical receipts) - but I have 3 HSA accounts, so I'm not sure which account to deplete - not sure which one is causing the excess problem

- I haven't had a high deductible plan since 2019, and am not able to join one again.

In summary, I'd like to either (1) withdraw the excess amount & pay the 20 % penalty, but TurboTax says too late ; or (2) Deplete an HSA account to -0- with qualified medical expenses, but I have 3 HSAs - not sure which one to deplete - if that matters.

Any help is appreciated! Thank you!

M

Mike9241

you do not have 3 HSA's for tax purposes they are combined

you would need to contact any custodian to request a withdrawal of the excess on which you would pay a 20% penalty + income taxes

your other option

You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax. If you are no longer an eligible individual, you can still receive tax-free distributions to pay or reimburse your qualified medical expenses.