HSA 6 Month Rule When Starting Medicare - Looking for Clarity

So what happens if the employer contributed after the cutoff date without them knowing? Do they need to take that money out of the HSA account somehow? And is there a deadline to fix this?

Yes, any contributions made during the 6-month lookback period (including employer contributions) should be withdrawn as "excess contributions." You'll need to contact your HSA administrator to request a withdrawal of excess contributions. The deadline to avoid the 6% excise tax is your tax filing due date, including extensions (typically April 15, 2026 for the 2025 tax year, or October 15, 2026 if you file an extension). When you withdraw the excess, you'll include that amount as income on your tax return for the year the contributions were made.

Does it work for other HSA problems too? Like I accidentally contributed too much last year because I didn't realize my wife's FSA made me ineligible.

Sorry but I'm skeptical about these random tax tools. How do you know it's giving accurate advice? I'd be worried about trusting something online with this kind of complicated tax situation. Did you verify what it told you?

Yes, it absolutely works for other HSA issues too! It analyzes contribution limits across multiple scenarios including FSA conflicts. It can identify if you've exceeded limits and calculate exactly how much to withdraw to correct the situation. Regarding accuracy, I completely understand the skepticism. What convinced me was that the tool cites the specific IRS publications and Medicare rules it's using for its analysis. I actually took its recommendations to my accountant who verified they were correct. The tool gives you a detailed report with references that you can review or share with your tax professional.

How does this actually work? Like do they have some special connection to Medicare or something? I've been on hold so many times I've lost count.

This sounds like a scam honestly. No way they can make government agencies call you faster than anyone else. They probably just take your money and then you still end up waiting.

They don't have special connections to Medicare - they use a technology that continually redials and navigates the phone tree for you, holding your place in line. When they reach a representative, they connect that person to your phone through a callback. It's basically like having someone wait on hold for you. The service works with over 15,000 government agencies including Medicare, Social Security and the IRS. I was skeptical too until I tried it. No more eating up my phone battery being on hold for hours or missing the call because I had to step away for a minute. They just notify you when they've reached a person and connect you directly.

Don't leave it alone! The IRS has been increasing enforcement around HSA contribution issues. That $1100 comes with a 6% penalty ($66) that continues EVERY year until corrected. Plus, if audited, you could face additional penalties. File Form 5329 to report the excess and pay the penalty. Then contact your HSA administrator to withdraw the excess plus any earnings. Yes, it's a hassle for $1100, but much better than dealing with compound penalties and potential audit flags. The IRS matches Medicare enrollment data with HSA contributions, so this is definitely something they can catch.

Thanks, I had no idea the penalty continues yearly if not fixed! I'll definitely contact my HSA provider to get this straightened out. Appreciate the detailed explanation about Form 5329 too - at least now I know exactly what to do.

The 6-month rule applies from when you FIRST enroll in ANY part of Medicare. So if your husband already has Part A, he's already ineligible for HSA contributions regardless of when he gets Part B. This trips up a lot of people who don't realize Part A alone disqualifies you from HSA contributions.

This is really helpful advice! I'm actually in a similar situation where my employer kept contributing even after I told them to stop. Quick question - when you mention the IRS showing more leniency for employer errors, does that mean they might waive the 6% penalty entirely, or just be more understanding about the timeline for fixing it? I have emails showing I requested the contributions to stop back in June, but they continued through August.

Great question! Unfortunately, the IRS typically doesn't waive the 6% penalty entirely just because of employer errors - you're still responsible for monitoring your own HSA eligibility. However, having documentation like your emails from June definitely helps establish that you acted in good faith and tried to prevent the problem. The "leniency" usually comes in the form of being more reasonable about correction deadlines and not pursuing additional penalties if you fix it promptly once discovered. Some tax professionals have had success arguing for penalty relief in cases where the employer made significant errors after clear instructions to stop, but it's not guaranteed. Your best bet is to withdraw the excess contributions ASAP and file Form 5329 with your return. Keep all that email documentation - if you do end up in an audit situation, it shows you weren't trying to abuse the system. You might also want to consult with a tax professional who has experience with HSA penalty relief cases, as they might know specific strategies for your situation.

Great question! The IRS doesn't typically waive the 6% penalty entirely for employer errors, but they may be more understanding about reasonable cause if you can document that you acted in good faith to stop contributions. Your emails from June showing you requested the stop are exactly the kind of documentation that helps. The penalty relief usually comes in the form of reasonable cause exceptions under IRC Section 4973, but you'd still need to withdraw the excess contributions to stop the penalty from continuing. The key is showing you took prompt action once you discovered the error and that it wasn't due to willful neglect on your part. I'd recommend withdrawing the excess contributions ASAP and then consulting with a tax professional about whether your situation qualifies for reasonable cause relief from the penalties. With your documentation showing you requested the stop in June, you have a decent case to make.

Great question! The IRS typically doesn't waive the 6% penalty entirely for employer errors, but they may be more flexible with the correction timeline and less likely to impose additional penalties if you can demonstrate it was truly the employer's mistake and not your oversight. The key is having that paper trail you mentioned - those emails from June showing you requested the stop are gold! Make sure to include copies when you file Form 5329 and request the excess contribution withdrawal from your HSA administrator. You'll still need to pay the 6% penalty on the excess contributions and withdraw them, but having documentation of your good faith effort to stop contributions can help if there are any questions during processing. The IRS is generally more understanding when they can see you tried to comply but were let down by your employer's payroll department. Just make sure to get this corrected before your tax filing deadline to avoid any additional complications!

Great question! The IRS can potentially waive the 6% penalty under certain circumstances, especially when the excess contributions were due to employer error and you made reasonable efforts to stop them. Since you have email documentation from June requesting the contributions to stop, that's exactly the kind of evidence that helps your case. However, even if the penalty is waived, you'll still need to withdraw the excess contributions and include them as income for the year they were made. The key is to file Form 8889 with your tax return and attach a statement explaining the circumstances - include copies of those emails showing you requested the employer to stop contributions. I'd recommend contacting the IRS directly (or using a service like Claimyr to avoid the hold times) to discuss your specific situation. They have procedures for these employer error cases, but you'll want to get the excess contributions withdrawn as soon as possible to strengthen your position. The fact that you acted promptly in June to stop contributions definitely works in your favor!

Great question! The IRS doesn't typically waive the 6% penalty entirely for employer errors, but they may be more understanding about the correction timeline and less likely to impose additional penalties if you can show you acted in good faith. Since you have emails proving you requested the stop in June, that's excellent documentation. The key is to withdraw the excess contributions as soon as possible and file Form 5329 with your tax return to report and pay the 6% penalty on the excess amount. However, there is one potential relief option - if the excess contributions were made due to "reasonable cause and not willful neglect," you might be able to request a waiver of penalties through a written statement to the IRS. With your email trail showing you tried to stop the contributions, you could have a case for reasonable cause. It's worth discussing with a tax professional who can help you determine if this applies to your situation. The most important thing is to get those excess contributions withdrawn before your tax filing deadline to avoid the penalty continuing into future years!

Great question! The IRS can potentially waive the 6% penalty if the excess contributions were due to reasonable cause and not willful neglect. Having email documentation showing you requested contributions to stop in June but they continued through August is exactly the kind of evidence that could support a reasonable cause argument. However, even if they waive the penalty, you'll still need to withdraw the excess contributions and include them as income for the year they were made. The key is to file Form 5329 with your tax return and attach a statement explaining the circumstances - include copies of those emails showing you tried to stop the contributions. I'd recommend withdrawing the excess contributions ASAP and then working with a tax professional to properly document the reasonable cause when you file. The IRS tends to be more forgiving when there's clear evidence the taxpayer acted in good faith but the employer made the error.

Great question! From what I've seen, the IRS typically doesn't waive the 6% penalty entirely for employer errors, but they are more understanding about the correction timeline and may not impose additional penalties if you act promptly to fix it. The key is demonstrating that you made a good faith effort to stop the contributions. Since you have email documentation from June requesting the stop, that's excellent evidence. Make sure to include copies of those communications when you file Form 5329 and request the excess contribution withdrawal. The IRS wants to see that the excess wasn't due to negligence or intentional disregard of the rules. You'll still need to pay the 6% penalty on the excess contributions from June through August, but having that paper trail should protect you from any additional penalties or audit complications. The important thing is to get the excess withdrawn as soon as possible and file the required forms - don't delay on this!

Great question about the penalty waiver! From what I've seen, the IRS typically doesn't waive the 6% penalty entirely for employer errors, but they may be more flexible about the correction timeline and less likely to impose additional penalties if you can demonstrate good faith efforts to comply. The key is having that documentation you mentioned - those emails showing you requested the stop in June are gold! Make sure to include copies when you file Form 5329 and request the excess contribution withdrawal. Some people have had success getting penalty relief by filing Form 843 (Claim for Refund and Request for Abatement) along with their documentation, though success isn't guaranteed. The most important thing is to get those excess contributions withdrawn ASAP. Even if you can't get the penalty waived, acting quickly shows good faith and prevents the 6% from continuing to compound. Keep all your documentation organized - employer emails, HSA statements showing contribution dates, and records of your withdrawal request.

Great question about the penalty waiver! The IRS can potentially waive the 6% excise tax if you can demonstrate "reasonable cause" for the excess contributions. Employer errors after you've given clear instructions to stop can definitely qualify as reasonable cause. You'll want to file Form 5329 and attach a statement explaining the situation, including copies of those emails showing you requested the stop in June. The IRS will review each case individually, but documentation like yours showing you acted in good faith significantly improves your chances of getting the penalty waived entirely. Even if they don't waive the penalty completely, they often reduce it or give you more time to correct without additional penalties. The key is being proactive - withdraw the excess contributions as soon as possible and file the proper forms with your explanation. Your email trail showing you tried to stop the contributions in June is exactly the kind of documentation that helps these cases!

Great question! The IRS can potentially waive the 6% penalty under certain circumstances, especially when the excess contributions were due to employer error and you can demonstrate you acted in good faith to stop them. Since you have email documentation from June showing you requested the contributions to stop, that's exactly the kind of evidence that could support a penalty waiver request. You'll want to file Form 5329 and include a statement explaining the circumstances - attach copies of those emails showing you tried to stop the contributions. The IRS has provisions for "reasonable cause" exceptions to HSA penalties when taxpayers can show the excess was due to circumstances beyond their control. Even if they don't waive the penalty entirely, having that documentation often results in them being more flexible with correction timelines and potentially reducing any additional penalties. The key is being proactive about fixing it and providing clear evidence that you weren't trying to circumvent the rules.

Great question! From what I've seen, the IRS typically doesn't waive the 6% penalty entirely, but they may be more flexible on the correction timeline when you can prove employer error. The penalty still applies to the excess contributions, but having documentation showing you requested the stop could help if there are any disputes about timing or intent. The key is to withdraw the excess contributions as soon as possible and file Form 5329 to report the penalty. Keep all those emails showing you requested the stop in June - that creates a clear paper trail that this wasn't your mistake. Some tax professionals have reported success in penalty abatement cases where employer errors were well-documented, though it's not guaranteed. I'd recommend consulting with a tax professional who specializes in HSAs if the amounts are significant. They can help you navigate the correction process and advise whether it's worth pursuing any penalty relief options based on your specific circumstances.

Great question! The IRS typically doesn't waive the 6% penalty entirely for employer errors, but they may be more flexible with the correction timeline and less likely to impose additional penalties during an audit. The key is having that paper trail you mentioned - those emails requesting the stop are exactly what you need. What you'll still need to do is withdraw the excess contributions made after your Medicare lookback period began, and you'll likely still owe the 6% penalty on those amounts. However, having documentation that you requested the stop in June shows good faith on your part, which can help if there are any disputes. Make sure to save all those emails and any other communications about stopping the contributions. When you contact your HSA administrator to withdraw the excess, mention that these were employer contributions made against your instructions - they may have specific procedures for handling these situations.

Great question! The IRS typically won't waive the 6% penalty entirely just because of employer error, but they may be more flexible with the correction timeline and less likely to impose additional penalties if you can demonstrate good faith effort to comply. Since you have email documentation showing you requested the stop in June, make sure to include copies of that correspondence when you file Form 5329 and request the excess contribution withdrawal. The IRS appreciates clear documentation that shows the excess wasn't due to taxpayer negligence. You'll still need to pay the 6% penalty on the excess contributions from July-August, but having that paper trail helps establish that you were trying to follow the rules correctly. The key is getting those excess contributions removed as soon as possible so the 6% penalty doesn't compound in future years.

Great question! From what I've researched and experienced, the IRS typically doesn't waive the 6% penalty entirely for employer errors, but they are more understanding about the correction timeline and may be less likely to impose additional penalties if you can demonstrate good faith effort to comply. The key is having that paper trail - those emails showing you requested contributions to stop in June are gold! Make sure to include copies when you file Form 5329 and when communicating with your HSA administrator about the excess withdrawal. You'll still need to pay the 6% penalty on the excess contributions and withdraw them before your tax filing deadline, but having documentation of the employer error helps show it wasn't intentional non-compliance on your part. Some people have reported success getting the penalty reduced in cases of clear employer error, though it's not guaranteed. The most important thing is to act quickly to withdraw the excess contributions made after your Medicare lookback period began. That stops the penalty clock from continuing to tick on those amounts.

Great question! The IRS generally won't waive the 6% penalty entirely just because it was an employer error, but they may be more reasonable about the correction timeline and less likely to impose additional penalties if you can show good faith efforts to comply. The key is demonstrating that you took reasonable steps to stop the contributions (like your June emails) and that you're correcting the issue promptly once discovered. Keep all that documentation - it shows you weren't trying to circumvent the rules. You'll still need to withdraw the excess contributions from August and include them as income for the year they were made, but having that paper trail definitely strengthens your position if there are any questions. The 6% penalty applies to the excess amount, so at least it's calculated only on the August contributions, not your entire HSA balance.

Great question! The IRS typically won't waive the 6% penalty entirely, but they may be more flexible about the correction process when employer errors are involved. With your documented emails showing you requested the stop in June, you have strong evidence that the August contributions were made without your knowledge or consent. The key is to withdraw the excess contributions as soon as possible and include those emails with your tax filing. Some tax professionals have had success requesting penalty abatement in cases where the taxpayer took reasonable steps to prevent the excess contributions but employer errors continued them anyway. I'd recommend consulting with a tax professional who specializes in HSA issues - they can review your specific situation and advise whether filing for penalty relief makes sense in your case. At minimum, having that documentation will definitely help if the IRS ever questions the timing of your correction.

Great question! The IRS generally doesn't waive the 6% penalty entirely for employer errors, but they may be more understanding about the correction timeline and less likely to impose additional penalties if you can demonstrate you took reasonable steps to prevent the excess contributions. With your email documentation from June showing you requested the stop, that's exactly the kind of evidence that helps your case. The key is to withdraw the excess contributions as soon as possible and file Form 5329 to report the situation properly. In some cases, if you can show the employer error was completely outside your control and you acted in good faith, the IRS might consider penalty relief under "reasonable cause" provisions, but this isn't guaranteed. Your best bet is to correct the excess promptly and include a detailed explanation with your tax filing showing the timeline and your efforts to prevent the contributions. The documentation you have puts you in a much better position than someone who just forgot about the rule entirely!

Great question! The IRS doesn't typically waive the 6% penalty entirely for employer errors, but they may be more flexible with the correction timeline and less likely to impose additional penalties if you can demonstrate good faith efforts to comply. Having those emails from June showing you requested the stop is really valuable documentation. When you contact your HSA administrator to withdraw the excess contributions, make sure to mention that these were employer contributions made against your explicit instructions. You should still expect to pay the 6% penalty on the excess amounts, but the IRS may be less aggressive about pursuing additional penalties or interest if an audit occurs. The key is to correct it promptly now that you're aware of the issue - don't delay since you have a clear paper trail showing your intent to comply with the rules.

Great question! The IRS generally doesn't waive the 6% penalty entirely for employer errors, but they may be more understanding about the timeline for corrections and less likely to impose additional penalties if you can demonstrate good faith efforts to comply. Having those emails showing you requested the stop in June is excellent documentation! Make sure to keep copies of all that correspondence. When you file Form 5329 to report the excess contributions, you can include a statement explaining the employer error with your supporting documentation. The key is still to withdraw the excess contributions as soon as possible and pay the 6% penalty on the excess amount. But with your documentation showing you acted in good faith, you're much less likely to face additional scrutiny or penalties beyond the standard 6% excise tax. I'd recommend contacting your HSA administrator this week to start the excess contribution withdrawal process, and consider consulting with a tax professional who can help you properly document the employer error when filing your return.

Great question! From what I've seen, the IRS typically won't waive the 6% penalty entirely for employer errors, but they may be more flexible about the correction timeline and less likely to impose additional penalties if you can show you acted in good faith. The key is documenting everything - keep those emails showing you requested the stop in June! When you file Form 5329 to report the excess contributions, include a statement explaining the employer error with copies of your communication. While you'll likely still owe the 6% penalty on the excess amount, having that documentation can help if there are any questions during processing. The most important thing is to withdraw the excess contributions (August contributions in your case) plus any earnings on those amounts before your tax filing deadline. Contact your HSA administrator ASAP since they'll need time to process the withdrawal and provide you with the proper tax reporting forms.

Great question! The IRS doesn't typically waive the 6% penalty entirely for employer errors, but they can be more understanding about the timeline for corrections. What you'll want to focus on is getting those excess contributions withdrawn as soon as possible. With your documentation showing you requested the stop in June but contributions continued through August, you have a strong case for demonstrating this wasn't intentional. The key is to act quickly now - contact your HSA administrator immediately to withdraw the excess contributions made after your Medicare lookback period began. You'll still need to file Form 5329 to report the excess contributions and pay the 6% penalty for the period they remained in the account, but having that paper trail showing you tried to stop them helps establish good faith. Some people have had success getting penalty relief through reasonable cause provisions, especially when they can show they took appropriate steps to prevent the excess contributions. The most important thing is don't wait - the 6% penalty accumulates each year the excess remains in the account, so getting it withdrawn now will minimize your total penalty exposure.

Great question! The IRS doesn't typically waive the 6% penalty entirely for employer errors, but they may be more flexible with the timeline for corrections. The key is that you still need to withdraw the excess contributions and pay the penalty, but having documentation showing you requested the stop could help if there are any disputes about your good faith effort to comply. What's most important is acting quickly now that you're aware of the issue. Contact your HSA administrator immediately to withdraw the excess contributions made after your cutoff date. Keep those emails showing you requested the stop in June - they're valuable documentation for your tax records. Also consider reaching out to your employer's HR or benefits department. Sometimes they'll work with you to help rectify their error, especially if it affected multiple employees or was a systemic issue with their payroll system.

Great question! The IRS typically doesn't waive the 6% penalty entirely for employer errors, but they may be more lenient about the correction timeline and less likely to impose additional penalties if you can demonstrate it wasn't your fault. Having those emails showing you requested the stop in June is excellent documentation. The key is to correct the excess contributions as soon as possible and include a statement with your tax return explaining the employer error. Some tax professionals recommend attaching copies of the emails to show you acted in good faith. While you'll likely still owe the 6% penalty on the excess contributions, the IRS is generally more understanding when there's clear evidence the taxpayer tried to comply but the employer made mistakes. Make sure to withdraw not just the excess contributions but also any earnings on those amounts. Your HSA administrator should be able to calculate this for you.

Great question! The IRS typically won't waive the 6% penalty entirely just because it was an employer error, but they may be more flexible about the correction timeline and less likely to impose additional penalties if you can show you acted in good faith. The key is demonstrating that you requested the stop in writing (which you have with those June emails) and that you're proactively correcting the issue once you discovered it. Keep all that documentation - the emails requesting the stop, any responses from your employer, and records of when you discovered the continued contributions. You'll still need to withdraw the excess contributions made after your 6-month lookback period and report them properly on Form 5329, but having that paper trail shows you weren't trying to circumvent the rules. Some tax professionals have had success getting penalty relief in similar situations, especially when the excess was relatively small and the taxpayer corrected it promptly after discovery.

Great question! The IRS doesn't typically waive the 6% penalty entirely just because of employer error, but they may be more flexible with the correction timeline and less likely to impose additional penalties if you can demonstrate good faith efforts to comply. The key is that you still need to withdraw the excess contributions and pay the 6% penalty for each year they remain in the account. However, with documentation showing you requested the stop in June, the IRS is less likely to treat this as intentional non-compliance, which could protect you from more severe penalties if they audit. Make sure to keep those emails! When you file Form 5329 to report the excess contributions, you might want to attach a brief explanation referencing your June request to stop contributions. While it won't eliminate the penalty, it creates a clear record that this wasn't willful disregard of the rules. The most important thing is to get those excess contributions withdrawn ASAP - every month they stay in the account, you're technically subject to the ongoing 6% penalty.

Great question! The IRS generally won't waive the 6% penalty entirely just because of employer error, but they may be more flexible with the correction timeline and less likely to impose additional penalties if you can demonstrate good faith efforts to comply. Having those emails from June is excellent documentation! When you file Form 5329 to report the excess contributions, you can include a statement explaining the employer error. While you'll still need to pay the 6% penalty on the excess amount for 2024, the IRS is typically more understanding about processing corrections when there's clear evidence the taxpayer tried to comply but the employer made mistakes. The key is to withdraw the excess contributions ASAP and file the necessary paperwork. Some tax professionals have had success getting penalty relief in similar situations, especially when the taxpayer can show they acted in good faith. You might want to consult with a tax professional who has experience with HSA issues - they can review your documentation and advise whether requesting penalty relief makes sense in your specific case.

Great question! The IRS can potentially waive the 6% penalty under certain circumstances, particularly when the excess contributions were made due to reasonable cause and not willful neglect. Having documented proof that you requested the contributions to stop (like your emails from June) definitely strengthens your case. However, even if they waive the penalty, you'll still need to withdraw the excess contributions and include them as taxable income. The key is to file Form 5329 along with a statement explaining the circumstances - attach copies of your emails showing you requested the stop date. I'd recommend contacting a tax professional who specializes in HSA issues to help you prepare the reasonable cause statement. They know exactly how to present these situations to maximize your chances of penalty relief. Don't wait too long though - the sooner you address it, the better your case looks to the IRS.

Great question! From what I've researched and experienced, the IRS typically doesn't waive the 6% penalty entirely for employer errors, but they may be more flexible about the correction timeline and less likely to impose additional penalties during an audit. The key is demonstrating that you acted in good faith by requesting the contributions to stop. Your email documentation from June is exactly what you need! Make sure to keep copies of all that correspondence. What you'll still need to do is withdraw the excess contributions (August contributions in your case) and pay the 6% penalty on those amounts. But having that paper trail showing you tried to stop the contributions early could help if there are any questions later. Some people have also had success getting their employer to reimburse the penalty since it was their error, though that's not guaranteed. I'd recommend contacting your HSA administrator ASAP to start the excess contribution withdrawal process. The sooner you fix it, the better your position if any issues come up later.

Great question about the leniency! From what I understand, the IRS typically doesn't waive the 6% penalty entirely for employer errors, but they may be more flexible on the correction timeline and less likely to impose additional penalties if you can show it wasn't your fault. The key is demonstrating that you acted in good faith - which you clearly did by requesting the stop in June. Keep those emails as documentation! When you file Form 5329 to report the excess contributions, you might want to attach a statement explaining the employer error with copies of your correspondence. The main thing is to withdraw the excess contributions and pay the 6% penalty for 2024. If you correct it promptly, that should be the end of it. Some people have had success getting penalty relief through the IRS's reasonable cause provisions, but that usually requires showing the error caused undue hardship or similar circumstances. I'd recommend talking to a tax professional who specializes in HSAs if the amounts are significant - they might know of additional options for your specific situation.