Terry53029
Level 14
Level 14

If your client funded an HSA while his wife had an open FSA then you need to remove funds including any interest or pay a 6% excise tax. Your client cannot open an HSA while his wife's FSA is open, even if it doesn't have funds. There is a way for his wife to have a limited FSA, and your client to have a HSA, but I am not familiar with the rules. Maybe someone who is will jump in.