How to Correct Putting Money into an HSA When You Have a Non-HDHP

Check eligibility on the go — browse 7,000+ HSA-eligible products in the free app.

How IRS treats non-eligible HSA contributions

Have you mistakenly put money into a Health Savings Account (HSA) without having a High Deductible Health Plan (HDHP)? Don't worry, it is a common mistake, but it's essential to rectify the situation promptly. Here's how you can correct putting money into an HSA when you have a non-HDHP:

When you contribute to an HSA without being eligible, the IRS considers it an excess contribution. To avoid tax penalties, you must correct this error by taking the necessary steps:

Key compliance steps to fix the mistake

• 1. Remove the Excess Contribution: Contact your HSA provider and request to withdraw the excess contribution amount. This should include any earnings generated by the excess amount.
• 2. Timely Correction: Ensure that you correct the excess contribution before the tax-filing deadline, typically April 15th of the following year.
• 3. File Form 5329: You will need to report the excess contribution on IRS Form 5329 and pay a 6% excise tax on the excess amount.
• 4. Consult a Tax Professional: If you are unsure about the process or tax implications, consider consulting a tax professional to guide you through the correction process.

Remember, it's crucial to adhere to the IRS guidelines regarding HSA contributions to avoid unnecessary penalties. By taking the appropriate steps, you can rectify the mistake and ensure compliance with HSA regulations.

Realizing you've made a contribution to your Health Savings Account (HSA) without a High Deductible Health Plan (HDHP) can be a bit alarming, but it's more common than you might think. To avoid any financial penalties, follow these steps to correct your contribution and keep everything in good standing with the IRS.