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Do excess contribution rules and prohibited transaction rules apply to HSAs?

April 26, 2017contribution excess HSAs Prohibited rules transaction

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Do excess contribution rules and prohibited transaction rules apply to HSAs?

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Yes. In fact, the rules are very similar to IRA rules. A 6% excise tax will be owed if an excess contribution is made and it is not corrected within a specified time frame. If an HSA participates in a prohibited transaction, the HSA will cease to be an HSA on the first day of the year. For more information on this subject, review the IRS website at www.irs.gov.