« Email Consulting Guidance – QDRO or Transfer Incident to a Divorce | Main

Email Consulting Guidance – HSA Contribution

Posted by James M. Carlson
Mar 06 2019

Q-1 We have a customer who has an HSA but is no longer eligible to contribute to it. She wrote a check at Shopco for some glasses or some item that was not correct and returned it. Shopco refunded her money by doing an electronic credit to that account. So now the account shows a deposit which she can’t do. How do we handle this?

A-1 A person who is no longer eligible to make an annual HSA contribution may be eligible to make a rollover contribution or a transfer contribution. When did the original withdrawal take place? Is she still within her 60 day rollover period? Is she eligible to make a rollover contribution of an HSA distribution and will she so instruct?

If so, the contribution may be treated at a rollover contribution even though it came from Shopco.

If not, the contribution would an excess contribution. She can/must withdraw the excess contribution. The bank will report the contribution as a regular/annual contribution. The distribution is to be reported as the withdrawal of an excess contribution (reason code 2 in box 3 on the Form 1099-SA). Box 2 on the Form 5498-

SA should be completed with 0.00 as there were no earnings related to the excess contribution.

Categories: Email Guidance