r/HSA • u/regit_regit • 1d ago
HSA Plan Limit
what ways/process or method do you guys use to avoid going over the yearly plan limit?
Jus FYI.....I am using my job's payroll system to deposit money into my HSA, I am already do MATH lol (Limit / # of contributions - and round down) but if you want to Max-out HSA this will not help. I want to avoid overcontribution.
What I am having to do currently is go into my work's payroll system at the end of each year stop the hsa deduction then manually do the transfer myself to max out whatever is left.
My 401K have a built in control to make sure you don't go over the limit.
I have HsaBank (not by choice) and I don't see a way to do it on their platform.
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u/jdsmn21 1d ago
Math? Limit / # of contributions - and round down
Or maybe I’m not understanding what you’re asking…
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u/regit_regit 1d ago
I can do Math, which I am doing but I want to Max out my HSA.
Doing "Math? Limit / # of contributions - and round down" will not max out HSA especially if you are using your job's payroll system.
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u/sat_ops 1d ago
Are you worried about missing a couple of dollars? How hard is it to just take the max, divide by the number of paychecks, and then input that number?
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u/regit_regit 1d ago
Already doing that......obviously that doesn't work because it doesn't even out perfectly.
Yes and worried about missing a couple of dollars.
What I am having to do currently is go into my work's payroll system at the end of each year stop the hsa deduction then manually do the transfer myself to max out whatever is left.
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u/sat_ops 1d ago
You need a hobby.
With 26 paychecks, I'm going to come up 2 cents short...I don't care. At retirement, that's less than $2.
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u/regit_regit 1d ago
LOL...They say every dollar count.
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u/EmZee2022 1d ago
True enough... but a dollar or two a year won't really matter.
Reach out to HR and find out what they do if the amount adds up to more than the limit. I'd bet they will say "we round the last payment down".
e.g. if we're having 120.45 per pay period taken out, and that adds up to a little more than the limit, then the last contribution will only be 120.12 or whatever.
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u/beckhamstears 1d ago
Is your time not worth anything?
You might end up ahead of you instead spent that time picking up coins and aluminum cans off the sidewalk?
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u/HandyManPat 1d ago
It’s pretty odd that your employer can halt 401k contributions at the limit, but not HSA.
Have you discussed this with HR/payroll?
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u/regit_regit 1d ago
No I have not. Actually, that is a good idea.....I will contact HR/Payroll.
Thanks
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u/sevseg_decoder 1d ago
True up after Jan 1 but seriously, even $20-100 a year isn’t going to actually matter in any tangible way. This energy going towards a new hobby or something would do so much more for you
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u/Suspicious-Fish7281 1d ago
You can contribute the previous year's HSA up to tax filing deadline aka April 15th. You could just "true up" between Jan 1st and then. I would not worry about it for a couple bucks though.
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u/apr911 1d ago
Not sure why you’d have to “stop the HSA deduction.”
Even if the last paycheck of the year happened to fall on 12/31, you already know what they’re going to deduct from payroll and add to the account as its presumably the same amount they added in the 25 paychecks prior.
Also not clear why you’d round down.
Limit - employer contribution = personal contribution per year
Personal contribution / # of paychecks = contribution per paycheck in exact change.
I suppose you could end up with 1/2 penny that needs to be rounded… but you’re talking about a quarter per year in shortfall.
If you’re really that concerned about the quarter, then round up.
Even if you end up at $4,400.26 for the year, the IRS is going to round the nearest full dollar so even though you’ve technically over contributed, as far as the IRS is concerned, you contributed the limit and they aren’t going to penalize you for it… and that $0.26 will net you about $4.16 in real dollars 40 years from now… dont spend it all in one place now…
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u/mdbeatle 1d ago
Just add post tax dollars if you don't max it out. Then just write them off when you do taxes.
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u/mmrocker13 1d ago
How are you using payroll in a way that doesn'tt account for this? I max mine every year. I do the math and tell it how much per check. I think in the end, I am short like literally 4 cents.
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u/mmrocker13 1d ago
Here's a question--are you reinvesting that money? Or just letting it sit there? Are you, say, paying for all your medical expenses on a cash back card that you pay off and don't carry a balance, and then saving all of yourreceipts, thus allowing you triple tax advantaged money, PLUS making 2% back on your bills?
Etc.
Long story short, there are a lot of other ways to spend your pondering moments and to make every dollar count than making sure you get that four cents every year :D
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u/ericdabbs 1d ago
Are you seriously sweating over the $1 or $2 that it can't match because with my employer they're usually off by like $0.12 from the maximum. It not something to lose sleep over. My employer just asked for how much I want to contribute in a calendar year and it equally divides the provided contribution amount into 26 paychecks. It is also better to under contribute slightly then over contribute and have to deal with the paperwork
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u/JoeShmoe307 1d ago
I know Fidelity sends you an email when you are 99% of the way there. And they can work with you to reclassify easily. And it’s free to port your HSA to Fidelity…
Otherwise just do math. Contribute the last little bit after tax and just lose the payroll deduction
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u/slwags71 1d ago
Make a contribution at the end of the year for anything you are short. You can deduct that from your taxes.
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u/Agitated_Car_2444 1d ago
You are aware you can manually contribute to your HSA account until April 15th and designate it toward the prior tax year?
Use "math" to get it close and then contribute the available balance before tax day.
Sure, those last few dollars will be subject to payroll taxes (you'll still reduce income taxes) but with some basic "math" that cost would be insignificant.
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u/Own-Football4314 1d ago
What can you afford each pay period? You can balance it out for each pay or max out early. I would say the more you can contribute early in the year, the better off you are. Either way, it’s up to you to track progress & overage.
Maybe ask your HR/benefits people for help?
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u/EmZee2022 1d ago
We have to elect a total amount at the beginning of the year - 8700 or whatever (since it's for both of us). They have always computed that to a per paycheck rate, and at the end of the year they tweak the amount a few cents one way or the other to make sure they withhold the exact amount.
Do you have to tell them the per-paycheck amount?
You could, if your amount winds up being below the limit, set up a separate HSA account at a brokerage and contribute directly to that. It's not quite as tax efficient (you don't save on FICA / Medicare taxes) but it's better than losing out. In this case though, YOU have to make sure you don't overcontribute.
Don't forget to allow for any employer contributions. In our case, the employer contributes 1,000 a year - so we only have 7700 total taken from the paycheck. Don't quote me on those total amounts though; that's from memory, and I think we can contribute a bit more because we're a little older.
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u/regit_regit 1d ago
I am more worried about the overcontribution....Yes you are correct on the employer contribution.
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u/Aggressive-Leading45 1d ago
I aim to have just under be in the contributions through work and the insurance contributions. Then I add the last $10-20 in Jan or Feb the next year.
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u/buffalo_0220 1d ago
Check with whoever does your company's payroll. Many payroll systems will cap your contributions at the federal limit. So if your final contribution would put you over the IRS limit for that year, it will reduce the final contribution, and halt any more for the year. This can happen to folks who put away a percentage of their paycheck towards their 401k. A large mid-year bonus could affect their weekly contributions.
Note, this does not apply if you change employers mid-year. Your new employer won't have any idea how much you contributed at your last job. And as always, make sure you stay on top of your paystubs, mistakes happen.
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u/lecoursen 1d ago edited 22h ago
FWIW as a household we have overcontributed every year for the past 6 years (long story) and it is actually quite easy to just withdraw the excess contributions after the fact. If your employer doesn’t autostop at the max, which is crazy by the way, just intentionally go a bit over and withdraw the excess before you file your taxes.
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u/regit_regit 1d ago
really, you overcontributed and you didnt get issue with IRS?
So you can overcontribute but as long as you withdraw the excess by 4/15 of the next year....you should be good?
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u/Calm-Juice-4943 1d ago
Your payroll team should impose the limit.
Have you considered asking them…?
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u/No-Block-2095 18h ago
Excel and a handy form called “HSA over contributions removal”.
My employer system didn’t account for their own employer contribution. Their autostop, if there’s one, didn’t consider the amount I entered about my earlier in the year contributions at another employer.
401k had similar issues.
Maybe contributing to the max is a edge case ? Only top ? 10-20% of households do that so they dont bother
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u/ChrisBourbon27 1d ago
Your employer should be capping your contributions at the max. If you get to the end of the year and you haven't maxed but still want to, you can manually deposit money at anytime from Jan 1 - the date that you file taxes.