What If My HSA Balance Is Less Than My Excess Contribution?

If your HSA balance is less than your excess contribution, you may face some challenges with your health savings account. Excess contributions occur when you contribute more funds to your HSA than the allowable limit set by the IRS. Here's what you need to know if you find yourself in this situation:

1. Contact your HSA provider: Reach out to your HSA provider as soon as possible to discuss the excess contribution and next steps.

2. Correct the excess contribution: You can withdraw the excess amount from your HSA to bring your account back into compliance with IRS regulations.

3. Avoid penalties: It's crucial to rectify the excess contribution promptly to avoid potential IRS penalties.

4. Use the excess funds for qualified medical expenses: Consider using the excess contribution amount for eligible healthcare expenses to avoid penalties.

5. Plan for future contributions: Be mindful of the annual HSA contribution limits to prevent excess contributions in the future.

If your HSA balance is lower than your excess contribution, it’s important to take immediate action to avoid potential penalties from the IRS. Excess contributions happen when you accidentally put more money into your HSA than the annual limit allows. The first step is to communicate with your HSA provider. They can guide you through the process of rectifying the issue.