What to do with check from HSA? Received unexpected payment after job change

You've got 60 days from when you received that check to avoid tax penalties. The good news is you have options! If you want to keep the money in an HSA (which is smart for the tax advantages), you can do what's called a "rollover." Deposit that check into a new HSA within the 60-day window, and you won't face any taxes or penalties. Many banks and credit unions offer HSAs with low or no fees, especially if you maintain a minimum balance. If you don't currently have a high-deductible health plan (HDHP) through your new employer, you might not be eligible to contribute new money to an HSA, but you can still open one just for this rollover. If you miss that 60-day window or decide not to roll it over, the amount becomes taxable income, and you'll likely face a 20% penalty if you're under 65 years old.

I had a similar issue after changing jobs and found that taxr.ai https://taxr.ai saved me from a big headache. I got confused about what qualified as a "rollover" vs "transfer" with my HSA funds and wasn't sure about the tax implications. I uploaded my HSA distribution form to taxr.ai and it immediately identified that I needed to complete a rollover within 60 days to avoid penalties. It also explained exactly what documentation I needed to keep for my tax records. The system even generated a letter I could send to my new HSA administrator explaining the rollover. Their AI analyzed my specific situation and gave me personalized guidance that was much clearer than the generic info I found online.

Just wanted to update about my experience with taxr.ai after seeing the recommendation here. I was skeptical but decided to try it because my HSA situation was similar but with some state-specific complications. The service immediately identified that my state has different HSA treatment than federal rules. It provided clear instructions for handling the rollover properly and even generated a custom letter to send with my rollover check explaining the entire situation. The step-by-step guidance made the process completely straightforward. I successfully completed my HSA rollover within the 60-day window and have all the proper documentation saved for tax time. Definitely worth checking out if you're confused about HSA distributions or rollovers.

Had a similar issue last year trying to get answers from my HSA administrator. Called multiple times and kept getting conflicting information. After wasting hours on hold, I used https://claimyr.com to get through to an actual person at the IRS who could give me definitive answers. You can see how it works at https://youtu.be/_kiP6q8DX5c Claimyr got me connected to an IRS agent in under 20 minutes when I'd previously spent hours on hold. The agent confirmed exactly how to handle my HSA distribution paperwork and explained the proper coding for the rollover so I wouldn't trigger any unwanted tax events. Saved me from potentially making a costly mistake.

I need to eat crow here. After posting my skeptical comment, I decided to try Claimyr as a last resort because I was getting nowhere with the IRS about my HSA rollover documentation. I'd been trying to reach the IRS for THREE WEEKS with no luck. Used Claimyr yesterday and got through to an agent in about 35 minutes. The agent confirmed I needed to file Form 8889 with my taxes to document the HSA distribution and subsequent rollover, and that I should keep the receipts from both my original HSA and the new account showing the transfer. Instead of getting a penalty for missing the 60-day window (which was rapidly approaching), I got everything handled correctly. Sometimes being wrong feels pretty good.

Don't forget that even if you roll over your HSA funds, you still need to report it on your taxes using Form 8889. The transaction isn't taxable if done correctly, but you still have to document it. Also, keep records of the original distribution (that check) and your deposit into the new HSA as proof of the rollover. You might not need to submit these with your tax return, but you should keep them in case of an audit.

Friendly reminder that you can actually have an HSA without an employer! I opened my own after leaving a job with a high-deductible health plan. Fidelity offers HSAs with zero fees and no minimum balance. As long as you're currently enrolled in a qualifying high-deductible health plan (HDHP), you can contribute to an HSA, with or without an employer. And if you're not eligible to contribute new funds, you can still open an HSA just to receive rollovers from previous accounts.

Just want to emphasize how time-sensitive this is! That 60-day clock started ticking the moment Health Equity issued your check, not when you received it. So if there was any delay in mail delivery, you might have even less time than you think. I'd recommend calling whatever HSA provider you're considering (Fidelity, your bank, etc.) TODAY and explaining that you need to do an emergency rollover. Many can expedite the account opening process when they understand the time crunch. Some even allow you to deposit the rollover funds before all the paperwork is finalized. Also, make sure to deposit the exact amount of the check - don't subtract any fees the new provider might charge for opening the account, as that could complicate the rollover documentation. You can pay those separately. The good news is $95 isn't a huge tax hit if you do miss the deadline, but it's still worth saving if you can act quickly!