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HSA Excess Contribution: Removal Deadline and 6% Tax
Educational information only. Not tax, legal or financial advice. We are not the IRS. Check IRS.gov and your plan documents. Last checked: October 17, 2026. Examples use made-up numbers. Anything marked expected should be re-checked.
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Short answer: Publication 969 says excess contributions aren't deductible and are generally subject to a 6% excise tax (Form 5329) for each tax year the excess stays in the account. You can avoid the tax on the amount withdrawn if you withdraw the excess by the due date, including extensions, of your tax return for the year the contributions were made, and you also withdraw the income earned on it and include that income in "Other income" for the year you withdraw.
Points from the publication
- Excess employer contributions are included in your gross income; if they aren't already in W-2 box 1, report the excess as "Other income".
- If you have excess contributions from earlier years still in the account, you may be able to deduct them in a later year (the lesser of two amounts defined in the publication).
- Retroactive Medicare coverage can create excess contributions: the limit is zero from the first month of Medicare enrolment, including retroactive periods.
Made-up example
Self-only limit $4,400 (2026); you and your employer together contributed $5,000 → $600 excess. If it stays, the 6% tax would be $36 for that year. If withdrawn by the deadline with earnings, the excise tax on that amount is avoided; the earnings are taxable "Other income".
Expected timing for 2026
For the 2026 tax year, the return due date is expected to be April 15, 2027 (October 15, 2027 with an extension). We did not read the 2026 edition of the publication.
FAQ
Who to ask? Your HSA trustee handles the withdrawal request; procedures vary (not verified).
What we could not verify
- 2026 edition of Pub. 969 and Form 5329 instructions.
- Trustee forms and timing for excess withdrawals.
Sources (official)
- IRS, Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health Plans — https://www.irs.gov/publications/p969 (read in part October 17, 2026; the 2026 edition was not yet posted)
Not tax/financial advice. Examples use made-up figures and have not been reviewed by a tax professional. See the disclosure.