HSA Over Contribution

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Topic Author
ChickenChops
Posts: 5
Joined: Thu Apr 22, 2021 12:29 pm

HSA Over Contribution

Post by ChickenChops »

Good morning folks,

After reading a bit here it seems I may have overcontributed to my HSA for the 2020 year. I was covered on a self only QHDHP for all 12 months of 2019 and contributed the full $3500 amount ($2800 from me and $700 through the plan). I remained on the same QHDHP for 2020 but due to military leave in 2020 I declined coverage for February of 2020 (I don't get the $600+ employer subsidy if I'm gone for over a month) and that is reflected on my 1095-C with all months except February being checked. During February I did not enroll in any additional coverage but I am always technically covered by the VA. For 2020 I contributed the full $3550 amount ($2850 from me and $700 through the plan). I will more than likely be switching to a low deductible plan later this year.

Am I correct in believing I overcontributed because I was not covered for February, making the max contribution 11/12 of $3550=$3254.17? I have not filed my 2020 taxes yet; do I need to do anything special with them? If I did overcontribute, how do I go about solving this? If I request a distribution through the HSA online it does not allow me to select the option for overcontribution and says I have contributed the allowed amount. I found a paper form I can send in for which I can specify overconttribution so maybe this is the best route? Finally, how do I know what gains came from the overcontribution? $2000 is required to remain in cash in the HSA so can I claim the overcontribution was cash rather than my VFIAX investment?

Oh, and another thing throwing me off is that Credit Karma's tax software is saying I haven't overcontributed even if I say I wasn't covered the entire year. I'm guessing this is because I'm not technically overcontributed yet if I were to meet the testing period and remain on the QHDHP through the rest of this year?

Thank you all for any help you can provide!
terran
Posts: 2966
Joined: Sat Jan 10, 2015 9:50 pm

Re: HSA Over Contribution

Post by terran »

Yes, it sounds like you probably over contributed by that one month unless you remain on an HSA eligible plan for all of 2021 and can therefore take advantage of the last month rule for 2020.

I was a little worried when you said you also have VA coverage, but it looks like that's fine.
Topic Author
ChickenChops
Posts: 5
Joined: Thu Apr 22, 2021 12:29 pm

Re: HSA Over Contribution

Post by ChickenChops »

Thanks for the reply, just wanted to make sure I was on the right track. I guess I better hurry up and file the paperwork to get it fixed.
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