View Full Version : I cashed out an employer funded HSA by writing a check to myself for lawful money…

04-08-15, 08:29 PM
Every penny of what I took out is in a vault, and I am honest about using it for medical expenses, it's truly set aside and the only way I take out any of if is if I exchange a receipt for the medical expense. However, I do not bow to Dictator Obama and his trainwreck of a reformed healthcare system.

That being said, I started redeeming lawful money for the last 3 months of 2014, so I've got a 1040 that's "normal" for 9 months and then I add the "other" lines for reduction in lawful money 12usc411 12usc95a2. This will all be more awesome when filing 2015 since it's all lawful money this year…

Questions is: I received a 1099-SA for the amount I cashed out of my HSA which has been fully redeemed as lawful money. How do I avoid this penalty for withdrawing this? The money that was placed in here was tax diverted and employer matched. Any insight what I'd need to do on a 1040 or 1099-SA to indicate that I have demanded lawful money and want a dollar-for-dollar reduction for this? Has anyone else tried this?

In the future and already for 2015, I am avoiding tax deferred deductions so that I can do them myself.

04-13-15, 03:30 PM
Good question, surely someone has some insight.

04-24-15, 09:22 AM
The question is better answered by the lawyer :)

05-05-15, 12:27 AM
To tie up this lose end...

I added another line to 1040 Line 21, Line 17 on "Other Income" sheet: "1099-SA reduction: lawful money and full discharge pursuant to 12U.S.C.§411 and §95a(2)" for the full gross distribution amount. Succeeded, got the cash out, and a refund on the tax penalty.

I am an honest person though, that money is safely locked up for future medical expenses on my terms, just not Obozo's.

Thanks for the confidence boost and courage to those who have helped me out so far!