Family HSA contribution limit for 2018 less than expected

[terran]

I just saw a post on Reddit that the Family HSA contribution limit for 2018 will be $6850 instead of the the $6900 that had been projected. The individual limit remains the same as projected at $3450.

[jlcnuke]

Yes, the tax bill last year is what changed this as I understand it by changing what inflation measure is used (now chained CPI instead of the traditional CPI).

[rantk81]

Argh. I'm going to have to tell my HR folks at my employer about this, as they have been taking an amount out if my check every other week that would put me over this "new" limit by the end of the year.

[terran]

Yes, the tax bill last year is what changed this as I understand it by changing what inflation measure is used (now chained CPI instead of the traditional CPI).

Interesting, thanks for the context.

Argh. I'm going to have to tell my HR folks at my employer about this, as they have been taking an amount out if my check every other week that would put me over this "new" limit by the end of the year.

Yeah, me too. Looks like that was an open enrollment only change at my wife's employer, so we can't make the change on the self service website. Hopefully they'll let us change it given the change in legal limit, otherwise I guess we'll have to take a distribution and figure out how to indicate that the tax forms.

[wenchsenior]

Crap...anyone know whether this will affect FSA or IRA/401k limits as well?

[charis]

Argh. I'm going to have to tell my HR folks at my employer about this, as they have been taking an amount out if my check every other week that would put me over this "new" limit by the end of the year.

To you and similar posts: Why not withdraw the $50 in excess contributions by the end of the year?  I just put an alert on my calendar in Dec 2018.  It's much easier for me to fax an excess withdrawal request to the HSA bank than deal with the red tape involved in lower my payroll contribution through my employer.

[rantk81]

Argh. I'm going to have to tell my HR folks at my employer about this, as they have been taking an amount out if my check every other week that would put me over this "new" limit by the end of the year.

To you and similar posts: Why not withdraw the $50 in excess contributions by the end of the year?  I just put an alert on my calendar in Dec 2018.  It's much easier for me to fax an excess withdrawal request to the HSA bank than deal with the red tape involved in lower my payroll contribution through my employer.

It's going to be a headache no matter what, since HSA contributions that happen directly from payroll are exempt from FICA taxes (which presumably would then have to be added back in for my 2018 tax filing?) and also the HSA administrator has excess-contribution-withdrawal fees too... Just a headache all around.  It's not as simple as taking a $50 withdrawal -- as just taking it out would result in a 1099-SA from the HSA administrator.  For me, the path of "least headache" is going to be trying to get my employer/payroll to fix it at their level.

[PDXTabs]

Crap...anyone know whether this will affect FSA or IRA/401k limits as well?

AFAIK it affects all inflation adjustment (including rates) in perpetuity. It's the real time-bomb in the tax code.

[wenchsenior]

Crap...anyone know whether this will affect FSA or IRA/401k limits as well?

AFAIK it affects all inflation adjustment (including rates) in perpetuity. It's the real time-bomb in the tax code.

Right, but I actually meant specifically: are we going to have to go in and try to re-adjust the allocations we set up for this year (2018) for these other types of accounts?

[Proud Foot]

Crap...anyone know whether this will affect FSA or IRA/401k limits as well?

AFAIK it affects all inflation adjustment (including rates) in perpetuity. It's the real time-bomb in the tax code.

Right, but I actually meant specifically: are we going to have to go in and try to re-adjust the allocations we set up for this year (2018) for these other types of accounts?

If your company uses any reputable payroll processor they should limit the deductions so you will not go over the limit. If you elect $150 per paycheck but you only have $100 left before the limit on the last payroll it should only deduct the $100.

[Tabaxus]

Going to cost me $25 to reverse the $50 over-contribution.  Absolutely [____] ridiculous.

[charis]

Which banks are charging fees to withdraw excess contributions?  I've had two that did not charge fees. 

For me it is a two-step process - fax withdrawal form and record it as taxable income on my tax return. 

[Tabaxus]

Which banks are charging fees to withdraw excess contributions?  I've had two that did not charge fees. 

For me it is a two-step process - fax withdrawal form and record it as taxable income on my tax return.

HSA Administrators is where I have the problem.

[SomedayStache]

Crap...anyone know whether this will affect FSA or IRA/401k limits as well?

AFAIK it affects all inflation adjustment (including rates) in perpetuity. It's the real time-bomb in the tax code.

Right, but I actually meant specifically: are we going to have to go in and try to re-adjust the allocations we set up for this year (2018) for these other types of accounts?

If your company uses any reputable payroll processor they should limit the deductions so you will not go over the limit. If you elect $150 per paycheck but you only have $100 left before the limit on the last payroll it should only deduct the $100.

Except my company doesn't track how much pass through money is contributed by my insurance company from premiums.  My personal contribution looks too low, but if you add in the $1500 pass through I'm suddenly over the new limit.

[terran]

There's a good discussion of this going over on the Bogleheads forum, including how to avoid paying fees to your HSA custodian to fix this. In Particular, this post: https://www.bogleheads.org/forum/viewtopic.php?f=2&t=243621#p3818532

[BlueMR2]

W.T.F. IRS?  Did they move their offices to one of the pothead states and are making drug induced poor decisions?

Infuriating.  Something that could easily go unnoticed and get people in trouble.  Nevermind those that frontload...  My payroll is tied in together with the same vendor for 401k, so I can't run that over, but not so with the HSA.  Payroll just shoots off whatever I've allocated and doesn't keep track of the total, and the HSA vendor just takes whatever you give them, so you have to get it right!

Seriously, just when you think the IRS can't possibly get any worse...

[Jim Fiction]

W.T.F. IRS?  Did they move their offices to one of the pothead states and are making drug induced poor decisions?

Infuriating.  Something that could easily go unnoticed and get people in trouble.  Nevermind those that frontload...  My payroll is tied in together with the same vendor for 401k, so I can't run that over, but not so with the HSA.  Payroll just shoots off whatever I've allocated and doesn't keep track of the total, and the HSA vendor just takes whatever you give them, so you have to get it right!

Seriously, just when you think the IRS can't possibly get any worse...

The fault for this lies squarely with Congress for pushing through hastily pasted together tax legislation in December.

[teen persuasion]

Ugh, just saw this on Bogleheads, too.  Emailed DH to get the ball rolling to fix his payroll deductions (and possibly clue in HR).

[Tabaxus]

W.T.F. IRS?  Did they move their offices to one of the pothead states and are making drug induced poor decisions?

Infuriating.  Something that could easily go unnoticed and get people in trouble.  Nevermind those that frontload...  My payroll is tied in together with the same vendor for 401k, so I can't run that over, but not so with the HSA.  Payroll just shoots off whatever I've allocated and doesn't keep track of the total, and the HSA vendor just takes whatever you give them, so you have to get it right!

Seriously, just when you think the IRS can't possibly get any worse...

Yeah, this is not the IRS's fault.