What to Do If I've Put Too Much Money in My HSA for 2019

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What to do after HSA overfunding

If you realize that you have contributed more than the permitted amount to your HSA for the year 2019, the first step is not to panic. Although this situation can be stressful, there are steps you can take to address the excess contribution and avoid penalties from the IRS.

Here are some actions you can take if you've overfunded your HSA:

Actions: withdraw, pay taxes, adjust contributions

• Remove Excess Contributions: You can withdraw the excess contributions and any earnings before the tax filing deadline, including extensions. By doing this, the amount will not be considered part of your gross income.
• Pay Taxes: If you do not withdraw the excess contributions timely, the surplus amount will be subject to income tax and an additional 6% excise tax.
• Adjust Your Contribution: In the following year, you can adjust your HSA contribution to account for the overfunded amount and avoid future issues.

Track contributions and act promptly

It is essential to track your HSA contributions throughout the year to prevent overfunding. If you realize you have contributed too much, take prompt action to rectify the situation and avoid unnecessary penalties.

If you find yourself in a situation where you've contributed more than the allowed amount to your HSA for 2019, don’t worry; it happens! The first step is to remain calm and follow the outlined steps to correct the excess funding and dodge any penalties from the IRS.

Here are proactive measures you can take to handle your HSA overfunding effectively:

Proactive measures to prevent future penalties

• Withdraw the Excess Amount: To avoid taxation, you can withdraw any contributions that exceed the limit, along with any earnings generated from those excess funds, before the tax filing deadline, even if you file for an extension.
• Be Ready to Pay Taxes: If the excess is not addressed timely, it may incur income taxes and a distribution of an additional 6% excise tax on the amount over the limit.
• Plan Ahead: For the subsequent year, you can modify your HSA contributions accordingly to compensate for the overfunded amount and ensure it doesn’t happen again.

Make it a habit to monitor your contributions throughout the year. Being proactive about your HSA can save you from unnecessary hassles!