HSA overpayment
#1
HSA overpayment
My employer has overpaid into my HSA putting over the maximum allowable IRS limit for the year. Will this be a problem at tax time? I work for an employer that is too big to do things correctly which makes life hard. Has anyone had experience of trying to get money out of an HSA for non-medical reasons?
#2
Lost in BE Cyberspace
Joined: Jan 2006
Location: San Francisco
Posts: 12,865
Re: HSA overpayment
My employer has overpaid into my HSA putting over the maximum allowable IRS limit for the year. Will this be a problem at tax time? I work for an employer that is too big to do things correctly which makes life hard. Has anyone had experience of trying to get money out of an HSA for non-medical reasons?
#3
Re: HSA overpayment
I tried that but they outsourced their hr department and they are as useful as a chocolate teapot. They came back and told me to speak to the hsa company, who then tells me to speak to my employer. What happens if I just ignore it?
#4
Lost in BE Cyberspace
Joined: Jan 2006
Location: San Francisco
Posts: 12,865
Re: HSA overpayment
"If you over-contribute to your HSA, you must pay income tax plus a 6% excise tax on any excess contributions and related earnings for each tax year the excess contributions remain in your HSA. To avoid the excise tax on excess contributions, remove the year's excess contributions and related investment earnings before the last day to file federal income taxes for the year, generally April 15."
https://crewconnect.vanguard.com/tot...ributions.html
https://www.discoverybenefits.com/em...tions-handled-
If the over-contribution was for the 2015 tax year, the second link implies that the excess will have already been reported as income on your W2.
Last edited by Giantaxe; Jun 21st 2016 at 1:28 am.
#5
Re: HSA overpayment
Unless you are in dire need of getting the money back, I wouldn't stress about it at all, because it all "comes out in the wash" anyway when you do your tax return.
#6
Re: HSA overpayment
Consider yourself lucky your company contributed the max. Pay tax on the rest. It is still free money.
Or do you mean they f'd up your elective amounts that you paid in?
Or do you mean they f'd up your elective amounts that you paid in?
#7
Re: HSA overpayment
Unfortunately is wasn't free money, it was money that came out of my pay check. I was more concerned about being audited, a 6% hit isn't too bad, only couple hundred dollars or so. It's just annoying because it wasn't my doing. If the company won't fix it I will just take time off to compensate. I don't think this will just "come out in the wash" because the HSA company has the money and pays interest or mutual fund gains/losses on the money. They basically paid a whole pay check into HSA instead of into my bank account and I had already been paying the maximum amount per month.
#8
Re: HSA overpayment
So have you now already paid too much into your HSA, or has this just put you on a trajectory to have over-contributed by the year end?
I was talking about your income tax for 2016 coming out in the wash - you only get a deduction for the maximum permitted contributions, and if you contribute AFTER tax money to your HSA it isn't a tax issue. I am not 100% certain but I believe that as I have maxium HSA contributions each year, and that Mrs P has an HSA which she is allowed by her employer to contribute half as much as me, we are probably over-contributing, .... but the tax deductibility all comes out in the wash, so I am not in the least bit concerned about it.
I was talking about your income tax for 2016 coming out in the wash - you only get a deduction for the maximum permitted contributions, and if you contribute AFTER tax money to your HSA it isn't a tax issue. I am not 100% certain but I believe that as I have maxium HSA contributions each year, and that Mrs P has an HSA which she is allowed by her employer to contribute half as much as me, we are probably over-contributing, .... but the tax deductibility all comes out in the wash, so I am not in the least bit concerned about it.
#9
BE Forum Addict
Joined: Aug 2013
Location: Athens GA
Posts: 2,134
Re: HSA overpayment
You can withdraw the excess before the filing deadline and pay normal tax on it or leave it in and pay normal tax plus 6%
#13
Re: HSA overpayment
It's a long time since I worked for an employer who consistently sçrewed up my pay, but I was a regular visitor to their payroll office, most memorably ten times in thirteen weeks one summer.
Last edited by Pulaski; Jun 21st 2016 at 1:22 pm.
#14
Re: HSA overpayment
The most scary thing is , if you live on the West coast , this may well be your health care provider. I just hope they treat the nurses and doctors better.