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Fixed Assets and UltraTax CS 2023 help is now on Help and Support. We're still moving articles, but you can find most content for the 2023 tax year there. Continue using the Help & How-To Center for tax years 2022 and older.

Question

What happens when MSA contributions exceed the maximum amount that qualifies for the deduction?

Answer

Excess contributions are subject to tax and should be included in the individual's gross income. In addition, an excise tax of six percent for each taxable year is imposed on the smaller of the amount of excess contributions or the value of the MSA at December 31, 2018. The excess contribution calculates and is reported on Form 5329, Additional Taxes on Qualified Plans and Other Tax-Favored Accounts. The value of the MSA should be reported in Screen 5329 in the Taxes folder or on Screen 5498SA in the Health Care folder to accurately calculate the excise tax.

Related topic: Medical and health savings accounts FAQs (1040)

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