accidental HSA withdrawal accounting

[free4now]

After eating a restaurant meal I realized I had forgotten my wallet. With visions of hours of dishwashing in my future, I realized I did have the debit card for my HSA plan with me, so I paid the $18 for my meal with that.

So now I have to figure out how to account for this weirdness of spending from my HSA account on non-medical care. I'm thinking the easiest thing is just to deposit $18 into the account to balance using the "Mistaken Distribution" checkbox on the contribution form.

Does that sound right?

 

[kaneohe]

Just guessing but i would think based on this:
****************************************************
Substantiation for your Debit Card Claims

Please remember, use of the HSA Debit Card does not remove any of the IRS claim substantiation requirements. You will need to save your receipts as they may be needed if the IRS requests documentation to verify that the funds in your HSA were used for qualified medical expenses.
***************************************************


The receipt would show that the card had been used for non-medical expenses and, if < age 65 y.o., would subject you to taxes and penalty on the distribution.

If you had already maxed out your HSA contributions for 2009 and 2010, I would not think you could add more to replace the $18. Either way, not a big amount.

 

[free4now]

Thanks Kaneohe. This HSA system is strange in that the whole purpose of the system is to give the IRS a high level of confidence that the money is going towards medical expenses. But in the end there's really no controls and I can even do things like withdraw cash. I'm supposed to keep receipts and records showing that it went for medical expenses and I do keep such records scrupulously, but I betcha most people just hope they don't get audited. It is somewhat of a bother to maintain and reconcile my spreadsheet of spending and harangue the doctors for receipts every time I see them.

If you had already maxed out your HSA contributions for 2009 and 2010, I would not think you could add more to replace the $18. Either way, not a big amount.

Originally I thought that too, but then I figured the "Mistaken contribution" box may circumvent the contribution counting towards the limits. We'll see because I was already maxed out and just sent my $18 in.

 

[ziggy29]

Originally I thought that too, but then I figured the "Mistaken contribution" box may circumvent the contribution counting towards the limits. We'll see because I was already maxed out and just sent my $18 in.

I'm pretty sure the $18 doesn't count toward the HSA contribution limits as it's just paying back a mistaken distribution.

 

[kaneohe]

I see no problem in writing a check to yourself....the assumption would be that you are simply reimbursing yourself for some qualified expense....assuming you would have the receipts to back it up. The problem I see w/ the debit card is that there is a direct paper trail to the expense. Still, I suppose I would be a bit upset if some auditor decided the best use of his time was to go after an $18 charge resulting in some $4 of extra tax.

 

[free4now]

Yes, just today I picked up a $13 prescription from the pharmacy and paid cash since I didn't have my HSA debit card. I'll write myself a check for that, which is a nice backup for when I can't use the HSA card. If I was really thinking ahead I should have gotten them to add a few more pills to up it to $18 and call it even with my mistaken distribution!

 

[kaneohe]

Perhaps you could interpret it as being your 1 allowed rollover every 12 mos.
As long as you replace it within 60 days and don't repeat for another 12 mos. you might be ok, even technically.

 

[Gone4Good]

We're talking about $18, right?

1) Do I have a medical receipt of some kind I could use to justify the $18 withdrawal?

2) No. To hell with it. If they audit me I'll pay the $6 tax and penalty at that time.