One situationespecially ripe for occurrence of an HSA error: when an employer'spayroll system calculates the HSA contribution based on 24 payrollperiods when the employee actually has 26.
The IRS recently published an information letter from 2015 thatappears to allow fairly significant leeway in correcting mistakenhealth savings account (“HSA”) contributions. While the newguidance appears helpful upon first review, employers with HSAsshould proceed with caution when considering correcting mistakenHSA contributions.
Previous IRS guidance
In 2009, as part of a larger IRS Notice on HSAs, the IRS issuedlimited guidance on mistaken HSA contributions. This guidanceprovided only two circumstances that allowed for the employer toask the HSA custodian (the “bank” that is holding the money) toreturn the employer's contribution: the money was contributed onbehalf of a completely non-HSA-eligible individual (for that entireplan year); or the employer's total HSA contributions exceeded theIRS-allowed HSA maximum amount for that plan year.
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