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HSA contribution when spouse dies during year

Level 2

New client lost his wife to cancer in April 2019. They contributed $8000 to their HSA at the beginning of the year.  Would there be an excess contribution that needs to be added back as income?

Another complication is that he turned 65 in 2019. I am waiting to hear if he started medicare and had HDHP.

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Level 13

See if this article is helpful:

https://dpath.com/mid-year-change-of-status-hsa/

 

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5 Replies 5
Level 13

Unfortunately, a HDHP under Medicare is not HSA qualified.

You would remove the overage, once you do the math for what is his limit for the year, and do so before the due date (which includes extension) of that return. Make sure to remove any earnings, as well. Don't leave it and keep paying the 6% excise tax and it seems you won't have any amount to "let it ride, pay the fee once, then apply it to the next year" if he now is on Medicare.

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"Level Up" is a gaming function, not a real life function.
Level 2

Unfortunately, I am amending the return because he didn't tell me about the contribution in the first place. Would she be eligible up until date of death?

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Level 13

HSA contributions are factored by monthly qualification. Died in April = 4/12 qualified. He goes on Medicare in July = 6/12 qualified. Don't overlook each of them might also be qualified for the $1,000 catchup amount for being 55 or older.

*******************************
"Level Up" is a gaming function, not a real life function.
Level 13

See if this article is helpful:

https://dpath.com/mid-year-change-of-status-hsa/

 

*******************************
"Level Up" is a gaming function, not a real life function.

View solution in original post

Level 2

Yes it was. Thank you very much.