What to Do If You Over Contribute to HSA? - A Guide for HSA Account Holders

If you find yourself in a situation where you have over-contributed to your Health Savings Account (HSA), don't panic. There are steps you can take to rectify the situation and avoid any penalties. Here's what you need to do:

1. Evaluate the Excess Contribution: Determine the exact amount that you have over-contributed to your HSA.
2. Withdraw the Excess Amount: You can contact your HSA provider to request a distribution of the excess contribution amount. This withdrawal should be done before the tax filing deadline for the year in question.
3. Pay Applicable Taxes: Any excess contributions that are withdrawn should be included in your taxable income for the year to avoid penalties.
4. File Form 8889: When filing your taxes, make sure to include Form 8889 to report the excess contributions and any corrective actions taken.
5. Stay Informed: Familiarize yourself with the rules and limits of HSA contributions to prevent over-contributions in the future.

Over-contributing to your Health Savings Account (HSA) can happen to anyone, but don't panic! First, take a moment to check your contributions against the IRS limits for the year, as understanding these boundaries will help prevent future mistakes.