landrover77

Thanks again for your reply Brian. I will check with the custodian about reclassifying them as a mistaken distribution. Lastly, am I correct that this point my next “deadline” is getting this taken care of before April 15th? I ask because I’ve seen other advice about trying to rectify things before the end of the year, but I’m not sure how accurate that advice is? Thanks!

Hey Brian, thanks so much for the reply and all that info. One thing I’m confused about in regards to the corrective distribution. What if there are not enough funds in my HSA account currently to cover the full amount of contributions for the year. My contributions plus my employers equal about $3000, but I only currently have about $2400 in the account since I spent some of the funds on medical costs earlier in the year?

My spouse had a medical FSA that she contributed to for 2024. I had an HSA that I contributed to for 2024 and my employer contributed into as well. I just found out that because my spouse had an FSA, I was not eligible for HSA contributions, so I'm trying to rectify this. To make matters worse, open enrollment was over a month ago for both of us and we elected to continue with our FSA/HSA respectively. I called my benefits department--they said I could bring my HSA contributions down to zero, and to avoid them from contributing to my HSA for 2025, I could ask the HSA custodian to close the account or to just "disassociate" it from my employer. I asked if they would be wanting their employer contributions back for 2024 and they said no. I'm going to wait until next week to officially do this, as first my spouse is going to see if her employer can cancel her FSA selection for 2025(seems doubtful I would assume). So ive gotten a few different bits of confusing advice on what to from online forums. One person said to spend the account down to zero before the end of the year on medical purchases--but can i do that if the contributions were ineligible in the first place?? Without going into too many details, there is a travel version of a medical device that I've been considering purchasing that I know would be an out of pocket expense that could easily remove a large chunk of the funds. Ive also heard about return of excess, but I'm in a bit of a bind there because my contributions of approx $2400 for the year plus my employers contribution of $600 is $3000 for the year. But there's only about $2400 in the account since I used funds for medical costs earlier this year--so how can the custodian return the full amount of $3000 if its not in the account? One thing to note--I never invested my HSA funds, they just sat in the account. What is the easiest way to rectify this? If there are multiple solutions, Id rather take the easier one even if that costs me a bit more money(up to a certain extent obviously). Any and all help is appreciated!