Question

IRA to HSA Transfer in excess of limit

Forum|Forum|5 years ago
February 3, 2021
1 reply
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In April 2020, I exercised my one time IRA to HSA transfer for the full $8,100 limit. However, when I became Medicare eligible in October and no longer had a high deductible plan, I realized that the annual limit would be prorated to $6,075 and the HSA administrator transferred the excess $2,025 to a non-retirement account (since beyond 60 days to return to IRA).

I've received a 1099-R from my IRA showing the $8,100 distribution and a 1099-SA from my HSA showing the $2,025 as a "Normal Distribution" instead of "Excess Contribution". If I show that I rolled $6,075 of the IRA distribution into another retirement account (is HSA considered retirement account for this purpose?), I will be appropriately taxed on the remaining $2k. If I then show the HSA distribution as being for eligible medical expenses (I have significant accrued out of pocket expenses during my HSA/high deductible period), it does not get taxed again.

This seems to provide proper taxation, but is this the proper way to file? Am I missing anything that could cause problems for this or future returns?

TurboTax Home & Biz Windows

S

sls50211

Sounds good. Since your HSA administrator refunded the $2025 excess, you did not overfund your HSA in 2020. When you input the 1099R, you would show the $6075 as transferred to your HSA (assuming you are married) then pay regular tax on the refund amount of $2025. If you had out of pocket medical expenses in 2020 to cover the $2025 you should be good. You must include any excess HSA contributions in income, which you are doing through reporting the $2025 as income on the 1099R distribution form.