• Page :
  • 1
  • Text Only
Voting History
rated:
I just checked and found that for 2010, we had $300 more than allowed to HSA account.

Should I just write a check to myself be done with it, or should I ask the managing financial institution to send me a check for $300?

I see that they charge $20 as fee to refund contributions over limit.

Thanks,

Member Summary
Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.
  • Also categorized in:
Thanks for visiting FatWallet.com. Join for free to remove this ad.

Have the HSA manager refund it as an over limit contribution.

If you just write yourself a check out of the HSA then that won't do it properly. The IRS will see that money went in and then see that you used it. They'd then want to tax you on the amount and penalize you for an excess contribution. I think the excess is hit with a 6% penalty (if it hasn't since changed).

Excess is hit with penalty, only if you realize it after the contribution period is over.

In this case, the contributions to 2010 HSA can be made until April, 15th, 2011.

Remember that you can make contributions for the prior year until April 15th of the following year.

If you made some 2009 contributions in early 2010, you may not have over-funded your HSA for 2010.

I was not eligible for HSA in 2009 given I was not enrolled in high deductible Health plan.

Your only option is to pay the overlimit refund fee or to just pay the extra tax penalty. I think it is only 6% of the over-contribution amount. I ended up just paying the penalty one year because it was less than the amount of the over-contribution refund fee my HSA Administrator was charging. All you have to do then is make sure your 2011 contribution is at least below the maximum by the amount of your 2010 over-contribution and you'll be all set.

Auream said:   Your only option is to pay the overlimit refund fee or to just pay the extra tax penalty. I think it is only 6% of the over-contribution amount. I ended up just paying the penalty one year because it was less than the amount of the over-contribution refund fee my HSA Administrator was charging. All you have to do then is make sure your 2011 contribution is at least below the maximum by the amount of your 2010 over-contribution and you'll be all set.

I agree. Pay the 6% penalty ($18) or pay the HSA bank $20.

seems like a no-brainer.

With the way our payroll deduction has been setup, my HSA contribution will be somewhere between 3050 and 3050.49 by year's end, unless I go find HR and bug them. Is this a problem, or does the IRS round down and consider everything to be ok?

Auream said:   Your only option is to pay the overlimit refund fee or to just pay the extra tax penalty. I think it is only 6% of the over-contribution amount. I ended up just paying the penalty one year because it was less than the amount of the over-contribution refund fee my HSA Administrator was charging. All you have to do then is make sure your 2011 contribution is at least below the maximum by the amount of your 2010 over-contribution and you'll be all set.
Note that you must still pay tax on the excess contribution, and you pay the 6% penalty every year until you fix it. See pub 969:
Generally, you must pay a 6% excise tax on excess contributions. See Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. The excise tax applies to each tax year the excess contribution remains in the account.
You can fix it in for next year by contributing $300 less than your limit:
Deducting an excess contribution in a later year. You may be able to deduct excess contributions for previous years that are still in your HSA. The excess contribution you can deduct for the current year is the lesser of the following two amounts.

* Your maximum HSA contribution limit for the year minus any amounts contributed to your HSA for the year.
* The total excess contributions in your HSA at the beginning of the year.
...
Any excess contribution remaining at the end of a tax year is subject to the additional tax.



Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Thanks for visiting FatWallet.com. Join for free to remove this ad.

TRUSTe online privacy certification

While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2014