I am signed up for an HDHP with an HSA. The HDHP coverage is not effective until June 1. I set up the HSA, sent my payroll person the information to set up the account and the pay date on which to start deducting from my paycheck. She set it up for the last pay in May instead.
My understanding on HSA's are that we cannot contribute to them prior to 1) the date the HDHP is goes in effect and/or 2) the 1st of the month following the HSA setup (regardless of when the HDHP went in effect.) I contacted the bank's HSA customer service and they didn't know if I would incur penalties and told me I should contact a tax adviser (which I don't want to spend money on - more than the amount contributed to my account.) Does anyone know about penalties related to this? Or would I not get penalized unless I tried to withdraw funds from the account prior to my effective date?
I can ask that she withdraw the funds and then start again on the next pay, but it would be a wash. But there would be a "paper trail" so to speak to show the correction. If this doesn't need to be done or would be a waste of time, I'd don't want to waste her time.
Hope that all makes sense.
My understanding on HSA's are that we cannot contribute to them prior to 1) the date the HDHP is goes in effect and/or 2) the 1st of the month following the HSA setup (regardless of when the HDHP went in effect.) I contacted the bank's HSA customer service and they didn't know if I would incur penalties and told me I should contact a tax adviser (which I don't want to spend money on - more than the amount contributed to my account.) Does anyone know about penalties related to this? Or would I not get penalized unless I tried to withdraw funds from the account prior to my effective date?
I can ask that she withdraw the funds and then start again on the next pay, but it would be a wash. But there would be a "paper trail" so to speak to show the correction. If this doesn't need to be done or would be a waste of time, I'd don't want to waste her time.
Hope that all makes sense.