Unnecessary mess with HSA

LearnMS

Level 2 Member
I kept HSA account (call it 1st HSA) from previous employer because it had Vanguard options. I have HSA option (2nd HSA) with my current employer and had contributed to max in 2018.

Now just last month, I noticed there was maintenance fee on old HSA acct (1st HSA) because I used up the funds on investments and kept the min of 2k in the account. But later, I was told the min must be 5k, not 2k to waive the maintenance fee. The agent I spoke to - said to transfer 3k from external account and keep it fee free.

So I transferred 3k in HSA account from Ally. Today, I received tax info that I contributed 3k of HSA funds from previous employer. This is in addition to my regular contributions on 2nd HSA through current employer. Definitely, it means that I overcontributed my HSA by 3k for 2018.

Wondering how I should fix that before filing taxes....is paying 6% penalty the only option? Should I just close my first HSA to avoid the mess? Thanks.
 

LearnMS

Level 2 Member
You should be able to fill out a form to remove the excess HSA contributions. You must remove the amount contributed (plus any earnings/interest on that amount) and pay/file taxes by April 15th.

If you had HSA Bank, for example, here is what that form looks like: http://www.hsabank.com/hsabank/~/media/Files/excess_contributions
Your HSA provider should have something similar.
Thank you. Yes, I was on phone with my 1st HSA bank agent. I was asked to fill out excess contribution form. Meanwhile, I downgraded my account over there to avoid the maintenance fee and no need to maintain 5k min balance. However, they do take $1 per month out just to have that account active. Now I need to figure out to either let go of dollar a month fee or just close it. Moving the investments to 2nd HSA is not an option as they are 2 different banks.
 

ILikePoints

New Member
Moving the investments to 2nd HSA is not an option as they are 2 different banks.
I'm not sure what this means but you can usually sell your investments to a cash position in one HSA and transfer it over to another HSA, then reinvest.

Fidelity has a fee-free HSA you might want to look into.
 
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