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I qualified for and fully contributed to an HSA for the last 5 years or so before retirement. I retired on 11/1/2020, but set up my HSA (and 401k) contributions to max out by my retirement date - including the additional "55 in a given year" amount. I didn't realize at the time (though it makes perfect sense in hindsight) that I would not be eligible to contribute the max HSA amount in 2020, because you have to hold the qualified, high-deductible insurance plan for each of the 12 months. Otherwise, your max HSA contribution is pro-rated based on the number of months you held such a plan.

While doing my 2020 taxes in TurboTax, it alerted me to the overcontribution issue and advised me to withdraw the $1350 overcontribution by the 4/15/21 tax filing deadline. I did so, and TurboTax included the $1350 as taxable income for 2020.

This seemed to be the logical end of it until I received a 1099-SA from Fidelity (holder of my HSA) showing the $1350 withdrawal coded as a "Normal distribution" instead of an "Excess contribution". This started my antennae wiggling, so I called Fidelity to ask how to get this corrected. The very polite and friendly representative eventually advised me that 1) I should have filled out a "Return of Excess Contribution" form back in 4/2021 instead of just transferring the money from my HSA to my checking account, and 2) The only way they could change the coding on the 1099-SA (which is reported to the IRS) would be if I filled out a "Return of Mistaken Distribution" form and returned the money to the HSA. However, this comes with the complication that I can no longer remove the overcontributed funds in a timely, non-penalty way since the deadline for doing so (for money contributed in 2020) has passed - even though I technically DID do it (on 4/5/21) and have already paid taxes on it with my 2020 tax return.

So, I guess I'm asking if anyone knows of a relatively simple way to address this way over-complicated situation (of my own doing). The one "positive" is that I had never gotten around to investing the money in my HSA after a change in HSA custodians six months or so before I retired, so any "Earnings" involved is just interest on cash and is therefore pretty insignificant. As I understand it, this is the only thing missing from the way I did it; i.e. if I'd filled out the "Return of Excess Contribution" form in the first place, it would have calculated a few cents of "Earnings" on the over-contribution.

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