On April 26, the IRS announced individuals with family coverage under a high-deductible health plan, $6900 will continue to be the maximum deductible Health Savings Account contribution for 2018. This is an adjustment following a March 2 reduction to the maximum HSA contribution when it was reduced to $6850 due to a change in inflation adjustment calculations for 2018 under the Tax Cuts and Jobs Act.
What You Need To Know
When the March 2 reduction to the maximum contribution was announced, it was quickly brought to the attention of the IRS and the Treasury Department that many qualifying HSA account owners had already made the originally announced maximum contribution prior to the March 2 announcement. However, many other HSA account holders had arranged for salary reduction elections based on the original $6900 limit. To lower the maximum allowed contribution on March 2 would create an unrealistic administrative and financial burden for both account holders and payroll and benefit administrators.
So, for any HSA account owners who contributed $6900 and who have already received as a distribution the difference between that amount and the new March 2 $6850 limit, the IRS advises that the distribution may be treated as a mistake. The account owner may repay the distribution to the HSA without suffering any tax burden or reporting implication. The revenue procedure also clarifies how to treat the distribution of an excess contribution and earnings based on the $6850 deduction limit.