HSA contributions are tracked on the calendar year, regardless of when your medical plan renews or you first become HSA-eligible. If you exceed your contribution limit for the calendar year and don’t correct the issue, you must include your excess contribution in your taxable income for that year. Your excess contribution generally is subject to an excise tax as well.
You can correct excess contributions by removing the excess amount (and any earnings attributable to the excess contributions) before you file your personal income tax return for that tax year. By doing so, you do not include the amount of the excess contribution in your taxable income and you face no additional tax.
To remove excess contributions, complete the HSA Distribution Request form, indicating Excess Contribution Removal as the reason for the distribution request. If you have excess contributions due to a contribution error made by your employer, use the Correct Contribution Error – HSA Distribution Request form instead. Both forms can be found under the Tools and Support tab of your secure online account at benstrat.com.
If HSA related IRS Form 5498-SA for the tax year in which the excess contribution was made have already been posted under the Statements and Notifications tab of your online account, you will receive an email notice when the corrected form have been posted. The Form 1099-SA for the tax year in which you make the Excess Contribution Removal will reflect the correction made.
If you made the excess contribution through pre-tax payroll deduction, you need to work with your employer to ensure that your Form W-2, which your employer delivers to you by January 31 to help you complete your personal income tax return, reflects your contributions accurately. To do so, you need to correct the mistake before the end of the calendar year and notify your employer. If you remove your excess contribution after December 31 but before the due date of your personal income tax return (April 15 most years), you must notify your employer, who then will issue a corrected Form W-2.