How to correct an excess HSA contribution
Identify the excess, understand the recurring 6% excise tax, and distinguish a timely corrective distribution from a normal withdrawal.
An excess HSA contribution can generally avoid the 6% excise tax when the excess and attributable earnings are withdrawn by the tax return due date, including extensions. The earnings are included in income for the year distributed.
First recalculate the limit
Combine employer, payroll, and direct contributions. Then apply the monthly eligibility limit, coverage changes, catch-up eligibility, Medicare months, and any valid last-month rule amount. A contribution is not automatically permitted because the custodian accepted it.
The 6% tax can repeat
The excise tax is generally 6% of the excess that remains in the account at year-end, limited by the account balance under the Form 5329 rules. It can apply again in a later year while the excess remains uncorrected.
Ask the custodian for the correct transaction
A return of excess contribution is operationally different from an ordinary HSA distribution. Contact the HSA custodian, identify the tax year, and request calculation of attributable earnings. Keep the corrected forms with the return.