What if the total HSA contributions in a year exceed the limit?
Excess contributions made by the individual cannot be deducted and an excise tax of 6% will be imposed for each tax year the excess contribution remains in the account. The excess contribution is not taxed when distributed, but the net income attributable (NIA) is included in the account holder’s income for the tax year in which the distribution is withdrawn. If made by the employer, the excess contribution must be included on the employee’s Form W-2 as taxable wages, and the account holder is subject to the 6% excise tax for each year the excess is not corrected.
Related Questions
- What happens when HSA contributions exceed the maximum amount that can be deducted or excluded from gross income in a taxable year?
- Can I make contributions into my HSA after the end of the calendar year but still receive the associated tax savings?
- What if the total HSA contributions in a year exceed the limit?
