Hey all, wondering if it’s possible to adjust my HSA contribution from my paycheck mid-year? Anyone done this?
Depends on your company’s policy, but legally, yes, you can.
Unlike plan selection or an FSA, the IRS doesn’t require you to lock in your HSA contribution at open enrollment. Employers or HSA providers might have rules on how often you can change it, but I believe they’re required to allow changes at least once a month. Best to check with HR or payroll and see if they have a form for adjusting HSA contributions. Usually, it takes a pay cycle or two to go into effect, which can make it tricky to hit the exact yearly limit if that’s your goal.
Make sure you don’t go over the contribution limit. Remember, any company match counts towards your total limit. For making changes, check your HSA website; some companies let you adjust contributions there. Mine uses Fidelity, and I can make updates on their site. It might take a few pay periods to kick in, so keep that in mind to avoid overcontributing.
@Waylon
Yeah, I’ll double-check to keep it below $4150. I can only deposit from my checking account, so I’ll add a few hundred that way.
Jayden said:
@Waylon
Yeah, I’ll double-check to keep it below $4150. I can only deposit from my checking account, so I’ll add a few hundred that way.
Have you asked HR? There’s no rule against changing your HSA contributions mid-year. Similar to a 401k, you can adjust as you need.
@Tavi
I already sent a deposit from my bank but will definitely ask HR about future contributions.
Jayden said:
@Tavi
I already sent a deposit from my bank but will definitely ask HR about future contributions.
Just remember, only payroll contributions are exempt from FICA and Medicare taxes.
@Tallis
Good to know, thanks for the heads-up.
Your employer should allow you to adjust HSA contributions at least monthly. The IRS calculates contribution limits monthly based on your coverage, so locking it in would conflict with that.
Torin said:
Your employer should allow you to adjust HSA contributions at least monthly. The IRS calculates contribution limits monthly based on your coverage, so locking it in would conflict with that.
Are you sure about that?
@Lin
Yep, I’ve read that changes are allowed monthly for administrative reasons. Tax code even has a provision for excess contributions to be fixed if needed.
HSA plans are required to allow at least monthly changes to your election.
@Torin
I found something that backs you up:
Employers have to allow monthly changes to HSA contributions for participants. States can’t really enforce tighter limits on this.
@Torin
I’ve adjusted my HSA contributions whenever I wanted, but never more than once a month since it takes time to update in payroll.
Your payroll department can let you know if you can adjust your contributions. If you make a direct bank transfer, you can still get a tax deduction when you file. There’s a place on the tax form for HSA contributions that aren’t on your W-2.
@Kris
It’s a bit different, though, since direct contributions aren’t exempt from FICA. Federal income tax will be the same either way.
Waylon said:
@Kris
It’s a bit different, though, since direct contributions aren’t exempt from FICA. Federal income tax will be the same either way.
True.
@Kris
Thanks for the info!