What is the Penalty for Excess HSA Contributions? - HSA Awareness

Health Savings Accounts (HSAs) are a valuable tool for saving money on medical expenses. However, it's important to be aware of the rules and limits associated with contributing to an HSA to avoid any penalties.

If you contribute more than the allowable limit to your HSA, you may face a penalty from the IRS. The penalty for excess HSA contributions is 6% of the excess amount per year until it's corrected.

To avoid this penalty, make sure you stay within the annual contribution limits set by the IRS, which for 2021 is $3,600 for individuals and $7,200 for families. If you have contributed more than the allowable limit, you have until the tax filing deadline to remove the excess amount.

It's essential to keep track of your HSA contributions throughout the year to ensure you don't exceed the limits and incur any penalties. Consulting with a financial advisor or tax professional can also help you navigate the rules and regulations surrounding HSAs.

Health Savings Accounts (HSAs) provide a fantastic opportunity to save funds for medical expenses, but it’s essential to know the contribution limits to avoid unnecessary penalties. If you accidentally contribute more than the allowed amount, which for 2021 was set at $3,600 for individuals and $7,200 for families, the IRS imposes a hefty penalty of 6% on the excess amount annually.