The 2018 HSA contribution is reduced in March

[Cpadave]

IRS just reduced the 2018 HSA for family from $6,900 to $6,850. For those of us who made the full contribution already (like me), we now have excess contribution that needs to be removed with income on before the due date of tax return

 

[JoeWras]

Wow. Unbelievable. Thank you chained CPI.

 

[Jerry1]

Thanks for the heads up.

 

[RunningBum]

Family only? Individuals unchanged?

 

[audreyh1]

I didn’t find anything on the IRS site which is odd.

Only this: https://www.plansponsor.com/tax-reform-changes-hsa-limits-family-coverage/

No changes to individual limits.

 

[audreyh1]

Family only? Individuals unchanged?

Yes

 

[Cpadave]

Yes. Here is the IRS link

https://www.irs.gov/irb/2018-10_IRB

 

[zinger1457]

I didn’t find anything on the IRS site which is odd.

Only this: https://www.plansponsor.com/tax-reform-changes-hsa-limits-family-coverage/

No changes to individual limits.

The site above does reference the IRS bulletin that does show the new amount.

https://www.irs.gov/pub/irs-irbs/irb18-10.pdf

 

[audreyh1]

Wow. Unbelievable. Thank you chained CPI.

Oops. That must be it!

But I thought chained CPI applies to future years, not 2018. Most of the legislation established new levels and then said chained CPI for that limit there after.

 

[audreyh1]

The site above does reference the IRS bulletin that does show the new amount.

https://www.irs.gov/pub/irs-irbs/irb18-10.pdf

Thanks, I didn’t find it initially. In future, it really helps folks here if the OP gives a link to their reference with information like this.

It’s on page 400 of the bulletin, by the way.

 

[audreyh1]

Yes. Here is the IRS link

https://www.irs.gov/irb/2018-10_IRB

Search on HEALTH SAVINGS ACCOUNTS

 

[JoeWras]

Oops. That must be it!

But I thought chained CPI applies to future years, not 2018. Most of the legislation established new levels and then said chained CPI for that limit there after.

SHRM is usually a reliable source for stuff like this:

The 2018 contribution limit for health savings accounts (HSAs) linked to family coverage will be $6,850—not $6,900, as the IRS had previously announced. The IRS recalculated the limit because the Tax Cuts and Jobs Act that passed at the end of 2017 applies the so-called chained consumer price index (chained CPI) to increases in HSA and a few other employee benefit contribution limits.

https://www.shrm.org/resourcesandto...owers-2018-family-hsa-contribution-limit.aspx

 

[Paracelsus]

I'm also not seeing the additional $1000 we were able to add if over age 55 - is that gone? (I'm a single filer, don't know if $1000 applied to families also).

 

[audreyh1]

I'm also not seeing the additional $1000 we were able to add if over age 55 - is that gone? (I'm a single filer, don't know if $1000 applied to families also).

No, that is not gone AFAIK. That additional $1000 is not indexed for inflation, so is not adjusted every year.

I believe they are only referring to limits that are set each year.

 

[RunningBum]

I hope not. I'm in the process of moving my HSA, after already maxing out my single contribution. It would probably be a huge pain to back out $500 or $1000 across the two places. Sounds like I don't have to, but this is ridiculous.

 

[45th Birthday]

Thanks for the heads-up. We have accounts at HSA Bank/TD Ameritrade and deposited using the previous limits. To get the $50 back out, I had to call HSA Bank (and wait an annoying amount of time) while they emailed me a form to complete. There is not a way to do it online apparently.

 

[retire2020]

IRS just reduced the 2018 HSA for family from $6,900 to $6,850. For those of us who made the full contribution already (like me), we now have excess contribution that needs to be removed with income on before the due date of tax return

I am in the same situation like you. I will not bother to rollback that $50 and go through hassle of paper work. Instead I'll do following at tax time next year.

"Leave the excess contributions in your HSA and pay 6% excise tax on excess contributions. Next year you may want to consider contributing less than the annual limit to you HSA to make up for the excess contribution during the previous year."

This will cost me extra $3 next year at tax filing.

 

[pb4uski]

I wonder if you could make the case that since you made the HSA contribution up to the limit that was announced by the IRS as of the date that you made it that it is fully allowable.

https://www.irs.gov/pub/irs-drop/rp-17-37.pdf

Not worth the effort but given the modest difference I do wonder they they bothered to change it and didn't grandfather 2018 contutions made before the date they announced the lower amount. I guess that would have been too sensible a solution.

 

[Scubamax]

Thanks for the alert. Lucky for me I was dragging my feet on doing the contribution so won't have to worry about any adjustments. Not the first time mild procrastination results in a win.

 

[easysurfer]

Doesn't apply to me since i'm s single contributor and not family. Plus, I don't make one big contribution but do so one month at a time.

Didn't know such a switch-a-roo on contribution limit rules even allowed. Learned something new.

 

[Jerry1]

I am in the same situation like you. I will not bother to rollback that $50 and go through hassle of paper work. Instead I'll do following at tax time next year.

"Leave the excess contributions in your HSA and pay 6% excise tax on excess contributions. Next year you may want to consider contributing less than the annual limit to you HSA to make up for the excess contribution during the previous year."

This will cost me extra $3 next year at tax filing.

After reading on my HSA's site and finding the form, it appears that requesting withdraw can incur a $20 processing fee. Then I looked up the penalty and as mentioned above, found it to be $3. I'll pay the $3 versus spending any time on this. Good to know though so I handle it correctly on my tax return.

 

[audreyh1]

I am in the same situation like you. I will not bother to rollback that $50 and go through hassle of paper work. Instead I'll do following at tax time next year.

"Leave the excess contributions in your HSA and pay 6% excise tax on excess contributions. Next year you may want to consider contributing less than the annual limit to you HSA to make up for the excess contribution during the previous year."

This will cost me extra $3 next year at tax filing.

Good idea!

I think a lot of HSA accounts charge fees for returning excess contributions. But maybe they'll make an exception in this case.

 

[audreyh1]

We also do monthly contributions, so in the last month I still can make any adjustments.

 

[SecondCor521]

I know little to nothing about HSAs. But I thought that the 6% excess contribution excise taxes on IRA contributions was assessed every year that the excess remained in the account. Some of the posters above imply that it is a one-time tax. Are HSAs different from IRAs in this regard?

 

[audreyh1]

I know little to nothing about HSAs. But I thought that the 6% excess contribution excise taxes on IRA contributions was assessed every year that the excess remained in the account. Some of the posters above imply that it is a one-time tax. Are HSAs different from IRAs in this regard?

The individual can simply put in a smaller contribution the next year to make it within the limits, no?