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HSA 2010 catchup contribution made in 2011

Sophia Hsu's Profile

Can an employee make his HSA contribution for 2010 in 2011 through paycheck deduction? The employee did not max out his legal limit ($6,150) in 2010 and asked employer to deduct the 2010 catchup contribution from his April 15th, 2011 semi-monthly paycheck. ADP warned that the said employee's 2011 total HSA contribution would exceed 2011 legal limit in W2 box 12. It appears that employees do have the option to contribute to HSA account by April 15th of the following year to reach the legal limit. Should employee write a check to his own HSA account and avoid paycheck deduction for prior year catchup contribution?

Answers

Rebecca Prince
Title: CFO
Company: AllChem Industries
(CFO, AllChem Industries) |

An employee can make an HSA contribution for 2010 in 2011 through a paycheck deduction, up until April 15 (April 18 in 2011). However, the employer must make sure that they specify to the HSA trustee that the payment is for the 2010 year. Otherwise, the trustee will, in my experience, default the contribution to 2011. You should call your HSA trustee to confirm their procedures to ensure correct processing. Call them BEFORE you tell your employee they can use paycheck deduction.

My understanding is that the HSA trustee reports contributions by year to the IRS, so if you don't advise them prior to their reporting 2010 contributions, then it will be too late and the contribution will count towards 2011.

To avoid the additional complexity, the employer can tell the employee to deposit a check to their own HSA account (ie using post-tax dollars) prior to April 18 (and allowing for processing time), and claim it as a deduction on their 1040 using attachment Form 8889. http://www.irs.gov/pub/irs-pdf/f8889.pdf

Sophia Hsu
Title: Sr. GL Manager
Company: Maxim Integrated Inc.
(Sr. GL Manager, Maxim Integrated Inc.) |

Thank you very much, Rebecca.

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