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Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1644
Experience:  Certified Public Accountant
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At tax time this year I withdrew money ($9500) from my IRA

Customer Question

At tax time this year I withdrew money ($9500) from my IRA to put into my wife's HSA Account. I was told by the administrator that I could apply half to last year (2015) and half to this year (2016). Several months later, they now told me that one half cannot be applied to last year. Now they want me to withdraw the excess. In the meantime I withdrew too much ($5,500). So now I have no clue how much the excess is. I also want to put the excess back into an IRA. For tax purposes? How do figure the excess and get this straightened out?
Submitted: 7 months ago.
Category: Tax
Expert:  Mark Taylor replied 7 months ago.

Hi, my name is Mark. I will be happy to help you with your questions. What kind of HSA plan did your wife have? Was it a single plan or a family plan?

Customer: replied 7 months ago.
It was a single plan.
Expert:  Mark Taylor replied 7 months ago.

The HSA contribution limits for a single plan is $3350 in 2015. If your wife was older than 55 in 2015 the limit increases to $4,350.

Expert:  Mark Taylor replied 7 months ago.

Is the Administrator saying they cannot apply anything to 2015?

The limits for 2016 are the same.

Customer: replied 7 months ago.
My wife is 63. Apparently it has something to do with the way the money came into the account. It was not It coded correctly by the administrator, so was not applied to 2015. The mistake, I guess, maybe, was made by the administrator but they said it was the way I transferred it. Anyway, they say they cannot correct it at this point.
Expert:  Mark Taylor replied 7 months ago.

That is terrible. You would think they would be accountable for their error.

So the HSA limit for 2016 is $4,350. The excess would be $5,150 ($9500 less $4,350). There may be some earnings too that would need to be withdrawn (that were attributed to this excess).

Expert:  Mark Taylor replied 7 months ago.

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Customer: replied 7 months ago.
I could do that math. What about the fact that I withdrew too much? What about putting the excess back into my IRA?
Expert:  Mark Taylor replied 7 months ago.

You would have 60 days to return the excess. The $9,500 would have been reported as a distribution in 2015. Depending on your earned income, AGI, and if you are your wife are covered by a qualified plan you may be eligible to contribute to a IRA of up to $6,500. Did you have any earned income? Approximately what will be your AGI? Are you or your wife covered through a retirement plan with an employee?