Help - I screwed up my HSA stuff

[rodi]

I'm doing my taxes. 2015 is my first year on a high deductible plan. It's also the first year that DH decided to be on a different insurer than us. I share a family plan with my 2 minor age sons.

I set up separate HSAs thinking that this way DH would be able to do the over 55 catch up. (And I'll be able to do that this year - since I turn 55 this year.)

But - I didn't realize the "family" applied to both of us.

I funded DH for the full individual amount plus catch up.
I funded myself and kids for the family amount.

I need to claw back some of this - since we're apparently capped at $6350 total OR 7350 total.... depending on which site you look at.

I'd like to keep DH's HSA intact with $4350 (individual amount plus catch up) and remove the excess from mine.

Here are my questions:
- How do I go about getting the overage back out?
- Can anyone confirm if I can do the $4350 for DH and the balance on mine and the kids?

Turbo tax is sniveling no matter how I input this.

Help.

 

[pb4uski]

The rules are very confusing. As I recall, if both you and your DH are over 55 you can contribute up to $8,650 in total. It can be $1,000 to yours and $7,650 to his or $1,000 to his and $7,650 to yours or anything in between.

Work through your HSA provider.

https://www.irs.gov/pub/irs-pdf/p969.pdf

If either spouse has family HDHP coverage, both spouses are treated as having family HDHP coverage. If each spouse has family coverage under a separate plan, the contribution limit for 2015 is $6,650.

If both spouses are 55 or older and not enrolled in Medicare, each spouse's contribution limit is increased by the additional contribution. If both spouses meet the age requirement, the total contributions under family coverage cannot be more than $8,650. Each spouse must make the additional contribution to his or her own HSA.

Example. For 2015, Mr. Auburn and his wife are both eligible individuals. They each have family coverage under separate HDHPs. Mr. Auburn is 58 years old and Mrs. Auburn is 53. Mr. and Mrs. Auburn can split the family contribution limit ($6,650) equally or they can agree on a different division. If they split it equally, Mr. Auburn can contribute $4,325 to an HSA (one-half the maximum contribution for family coverage ($3,325) + $1,000 additional contribution) and Mrs. Auburn can contribute $3,325 to an HSA.
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If only DH is 55 or older then his must be at least $1,000 and the other $6,650 can be split between you however you want. YMMV but that is my understanding.

If you overcontributed you can have your HSA process a return of a mistaken contribution (or something like that).

 

[rodi]

Ok - that confirms that I over funded (I did both individual - him; and family -mine). I need to reduce them to a combined 7650. (I'm still under 55).

TT is still sniveling no matter how I enter it. But reading through the instructions for form 8889 - TT may be sniveling over nothing.

Any idea of how to withdraw the excess contribution?

 

[panacea]

The rules are very confusing. As I recall, if both you and your DH are over 55 you can contribute up to $8,650 in total. It can be $1,000 to yours and $7,650 to his or $1,000 to his and $7,650 to yours or anything in between.

Work through your HSA provider.

https://www.irs.gov/pub/irs-pdf/p969.pdf


If only DH is 55 or older then his must be at least $1,000 and the other $6,650 can be split between you however you want. YMMV but that is my understanding.

If you overcontributed you can have your HSA process a return of a mistaken contribution (or something like that).

yep- this sounds right to me too. I believe you just need to complete an excess contribution form with the institution. TurboTax can be a pain with this- might be easier to find the form and hard key it in.

 

[pb4uski]

It's been a few years since we had a HSA eligible plan but I think I may have used the step-by-step for our HSAs even though I typically use the forms.

 

[pb4uski]

...Any idea of how to withdraw the excess contribution?

Look on your provider's website or call them. You "might" be able to have them do a return of excess contributions and then apply the proceeds to your 2016 contributions rather than them send you a refund and then you send them money later in 2016.

 

[MBSC]

Any idea of how to withdraw the excess contribution?

Call or check the HSA custodian's website for an excess contribution form. Note that the custodian should calculate any earnings on the excess and return/reallocate those for you.

The form will look something like this: http://www.hsabank.com/~/media/Files/excess_removal

If an excess contribution for 2015 is reported and corrected between January 1 and April 18, 2016, the amount will be reported as a distribution of “Excess contribution” on your 2016 Form 1099-SA (funds distributed) that you will receive in January 2017, but it will still be reported on your 2015 Form 5498-SA (funds contributed). There will be no tax penalty.

Excess contributions may be corrected in one of two ways. Either way requires the account holder to send a signed request. You may:

• Request a refund by Treasurer’s Check for the amount in excess, if there is enough money in your HSA to cover the amount.
• Request that the excess funds be reallocated from 2015 to 2016. This will decrease the amount of new funds that may be contributed to your HSA for 2016 before you reach the maximum annual contribution limit.

Reference: https://beniversalhsa.mybankingservices.com/hsa-resources/tax-info-for-hsas/

 

[sengsational]

I over-funded in 2014. I got a form 2606H from my HSA provider. I filled it out with "withdrawl of an excess contribution before the early withdrawal deadline (IRS code 2)." I asked to pull $650 out, and they sent me a check for 655.45, because I had 5.45 earnings (proportionally) during the over funding span.

Then, on the tax form 8889, you reduce the amount you put into the HSA by what you pulled out, so it looks perfect on your current year taxes..no sniveling.

The following year, you will get a 1099-SA, and it will show what you pulled out plus the earnings on the amount you pulled out. I guess you need to report those earnings the following year.

Edit: I just checked, and I had to override a value on "the following year" 8889 because the tax software didn't let me put in a value in form 8889 line 14b (had zero and should have been 650 or 655). You won't have to worry about this until you do your 2016 taxes. But expect sniveling next year.

 

[ABQ2015]

Request the excess contribution now so you can get it before the tax deadline. Otherwise you will have to file a tax amendment and fill out Form 5329 (in addition to Form 8889) and pay a 6% penalty on the excess contribution.

Sensational: You must have similar health insurance to mine as my excess contribution was also $650. I wish that darn insurance company would have called their "contribution" a "contribution" instead of the odd term that was used. It really fouled me up.

 

[gauss]

Rodi,

Depending on the value of your time and frustration, there is another way I think that you can deal with an excess contribution. I did this with an IRA once where the amount of the excess contribution was fairly small and it worked out very nice.

1. You can leave the amounts as they are with the HSA custodian.
2. You will need to file form 5329 (part VII) for the current year and pay 6% penalty on the amount of the excess contribution.
3. Next year reduce your contribution from the maximum by at least the amount of this year's excess contribution.

You should then be OK going forward as long as you stay below the maximum contribution each year. Of course you will also need to fill out form 8889 each year that you make contributions and/or take distributions.

I believe most well-designed commercial tax software should be able to handle this and fill out the forms automatically for you based on your answers to the questions.

If you go this route, be sure to put a reminder in your calendar to reduce your next year's contribution from the maximum by the appropriate amount or else you will be facing the same problem again.

FWIW I am currently considering if I would like to re-characterize a fairly large Roth conversion from last year and the associated hassle.

-gauss