Question

Should I treat an hsa employer facilitated transfer the same as an hsa rollover?

Forum|Forum|1 year ago
March 11, 2025
1 reply
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My employer during 2024 changed banks for our HSA so the funds from the original had automatically transferred to the new. I received two 1099-SA forms and two 5498-SA forms for each HSA. If I add both 1099-SA forms, it combines the total contributions at the end, which doesn’t seem correct. While filing on TurboTax, I’m not sure if I should select the option for the first 1099-SA as “I used part of my HSA for medical expenses” (paraphrasing) because if I do, it provides an option to include how much did I rollover to another HSA.

TurboTax Deluxe Online

B

BillM223

If the trustee for the first HSA sent your money directly to the second HSA, then, technically, this is not a rollover. See page 4 in the 8889 Instructions.

Indeed, if it were a trustee-to-trustee transfer, they should not have even sent you a 1099-SA. See page 1 of the 1099-SA Instructions.

Did you say that you received two 1099-SAs for each HSA? For a total of 4? Was it two for the first HSA and two for the second?

Please tell me what the distribution code was in each of these 1099-SAs (there is no distribution code for a transfer nor for a rollover)?

If this was a trustee-to-trustee transfer, then do 2 things:

Copy this answer (and preserve the links) to Word or something, and

Don't enter the 1099-SAs at all

Anyway, read this response and see if it matches your situation.

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G

glisderoAuthor

Thank you for the recent response!

My apologies for any miscommunication earlier. I received one 1099-SA and one 5498-SA for each HSA. So I have two 1099-SAs in total. And both of the 1099-SAs have distribution codes of 1

And just for extra clarification, I had my first HSA (which was BenefitWallet) all the way up to around April, 2024, and then my company at the time had changed HSA banks to HealthEquity, who had sent an email stating no action is needed as the funds from the previous HSA will be transferred to them (i.e. HealthEquity).

Thank you so much for your time and knowledge.

B

BillM223

These two 1099-SAs, the distribution code was 1 for each. Was the distribution amount equal to any medical expenses you had, or was the 1099-SA for the first HSA obviously reporting the amount transferred over to the second HSA?

As I said above (I think), the first HSA custodian should not have issued a 1099-SA for the transfer to the second. If this is the case, you should two things: (1) ignore the 1099-SA (don't enter it into TurboTax, and (2) document what you did and why and put it in your tax archive in case anyone ever asks.

One thing that triggers the IRS is when you don't report a form that they have a copy of. But in this case, the HSA custodian should never have issued a form, so if you get a letter about this, just tell them this story.

I am assuming that the 1099-SA for the second HSA is for qualified medical expenses, in which case, you just enter it into TurboTax as normal.

Note that you don't have to include your 5498-SA in your tax return, so just stick them in your tax archive.

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