HSA Employer Overcontribution
July 1, 2014 11:42 AM Subscribe
My new employer is adding what looks like a pre-tax contribution of an extra 1k to my paychecks monthly to pay for health insurance and the remainder is meant to be put in to an HSA. My wife's insurance plan only costs us $210/mo and the HSA contribution limit for a family is $6550/yr what is going to happen to the remainder of the money?
What would be the best way to deal the excess?
Would it be wise to invest all the money in the stock market or some other investment and fill my HSA to the max at the end of the year keeping the dividends for myself?
What are the implications of all this come tax time?
What would be the best way to deal the excess?
Would it be wise to invest all the money in the stock market or some other investment and fill my HSA to the max at the end of the year keeping the dividends for myself?
What are the implications of all this come tax time?
If you wind up with excess contributions, you have to withdraw them (and the investment earnings attributed to them) by the due date or you'll get hit with an extra 6% excise tax when you file your taxes. If you do withdraw them in time, you'll have to pay regular income tax on the excess amount and the earnings as though the money was invested in a normal brokerage account.
I'd talk to your HR about changing your HSA contributions. As I understand it, you can usually change your contribution amount anytime going forward, so you can avoid the whole problem by getting the amounts right for you.
posted by zachlipton at 11:48 AM on July 1, 2014
I'd talk to your HR about changing your HSA contributions. As I understand it, you can usually change your contribution amount anytime going forward, so you can avoid the whole problem by getting the amounts right for you.
posted by zachlipton at 11:48 AM on July 1, 2014
I would get with your HR person about this. Employers typically contribute a sum into your HSA (mine is $600 annually.) $12,000 seems rather high. Unless this is the 'no health insurance' option.
If you truly are getting $12,000 annually contributed to your HSA, yes, there are limits, and you would be responsible for the taxes on the overage. Again, discuss with your HR department, and with your accountant.
Of course you'll pay your medical deductibles and co-pays from your HSA account. And you can invest the rest (depending on your HSA account holder.)
But start with HR, then discuss with your accountant.
Wait, is this the employer contribution, or YOUR contribution?
posted by Ruthless Bunny at 11:49 AM on July 1, 2014
If you truly are getting $12,000 annually contributed to your HSA, yes, there are limits, and you would be responsible for the taxes on the overage. Again, discuss with your HR department, and with your accountant.
Of course you'll pay your medical deductibles and co-pays from your HSA account. And you can invest the rest (depending on your HSA account holder.)
But start with HR, then discuss with your accountant.
Wait, is this the employer contribution, or YOUR contribution?
posted by Ruthless Bunny at 11:49 AM on July 1, 2014
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I'd keep the rest around to function as your de facto deductible.
posted by michaelh at 11:44 AM on July 1, 2014