Thanks for the heads up! Do you know if there's a specific deadline for this? Is it the tax filing deadline (April 15, 2026) or do I need to do this before the end of 2025?

You have until the tax filing deadline for the year of the contribution, including extensions. So for contributions made in 2025, you have until April 15, 2026 (or October 15, 2026 if you file an extension) to withdraw excess contributions without penalties. However, I'd recommend handling it sooner rather than later just to have it resolved. And yes, any earnings specifically tied to those excess contributions also need to come out, and those earnings would be taxable income in the year you withdraw them.

Unfortunately, once you contribute to someone else's Roth IRA, that money legally belongs to them. It's now part of their retirement assets. The best approach is to address this in your divorce settlement negotiations - you could potentially ask for other assets of equivalent value in the division of property. Your situation is exactly why my attorney advised me to pause all contributions to my spouse's accounts as soon as divorce was on the horizon. Some states might view this differently depending on community property laws, but generally speaking, that money is considered gifted to them.

Thanks for the insight. That's what I was afraid of. I'll definitely bring this up with my divorce attorney to see if we can factor it into the overall settlement. Lesson learned for sure.

Is there a minimum amount required for reimbursement? I have a few small co-pays like $20-30 each that I paid with my debit card.

There's typically no minimum amount required for reimbursement - you can request even small amounts like $20-30 copays. However, some people prefer to batch smaller expenses together and request reimbursement quarterly or annually just to reduce the paperwork and transactions. One strategy some people use is to intentionally pay smaller expenses out of pocket, save the receipts, and let their HSA funds grow tax-free for years. Then they can reimburse themselves much later (even in retirement) when they might need the cash more. As long as you have the documentation showing the expense was HSA-eligible and incurred after you established your HSA, there's no time limit.

I actually went through an IRS audit last year that included reviewing my HSA. As long as you have proper documentation, there's no problem claiming old expenses. The IRS specifically states there's no time limit. I had reimbursed myself for expenses from 4 years prior and provided: 1. Original receipts showing the medical nature of expense 2. Proof of payment (credit card statement) 3. Proof it wasn't reimbursed by insurance (EOB) They didn't question it at all.

But wouldn't the 401k plan administrator be responsible for coding this properly? If they put code E instead of something else, couldn't that be the actual problem rather than the IRS misinterpreting it?

You're absolutely right that the plan administrator has primary responsibility for coding 1099-R forms correctly. Sometimes administrators do use incorrect codes, and that could be part of the problem here. Code E isn't necessarily wrong, but there's some ambiguity in how it's applied. Ideally, the administrator should have used a distribution code that more clearly indicates a return of after-tax contributions. It might be worth contacting your plan administrator to verify they used the correct code for your specific situation. They can issue a corrected 1099-R if needed, which would save you the hassle of explaining things to the IRS.

I used H&R Block software for a similar situation and had to manually override it. There should be an option to specify that the distribution isn't taxable despite what the 1099-R coding suggests. You might need to include an explanation or use the tax software's "notes" feature to document why you're treating it differently than the standard interpretation of the form.

You know what, this might actually make sense! She did travel to three different trade shows for them and they reimbursed her separately from her regular paycheck. I didn't even think about that. She also bought some computer equipment they reimbursed her for when she started working remotely. But shouldn't reimbursed business expenses NOT be reported on a 1099-MISC at all? Now I'm even more confused.

You're absolutely right - properly documented business expense reimbursements should NOT be reported on a 1099-MISC or considered taxable income. If the employer reimbursed legitimate business expenses under an accountable plan (basically meaning your wife provided receipts and documentation), then this 1099-MISC is likely incorrect. This actually makes it more likely there's an error in their accounting system. Sometimes companies, especially smaller ones with less sophisticated payroll systems, accidentally code expense reimbursements as "other income" which triggers an automatic 1099-MISC. You definitely need to contact them to get this corrected.

This happened to me! Turned out I was getting paid by two technically different legal entities under the same corporate umbrella. Super confusing but actually legitimate in my case.

I just double-checked and yes, the EIN is exactly the same on both forms. And no, she didn't do any work outside her regular job duties. It was a standard 9-5 marketing position. I'm going to call her old boss tomorrow morning. After reading everyone's comments, I'm pretty sure this is either a mistake or related to those expense reimbursements. Will update when I find out!

How exactly do you adjust your withholdings? I've seen this advice before but I have no idea how to actually do it.

You need to fill out a new W-4 form and submit it to your employer's payroll department or HR. The form was redesigned in 2020, so it's different from the old withholding allowances system. The new form has a section where you can specify an additional amount to withhold from each paycheck. For example, if you owed $1255 and get paid bi-weekly (26 paychecks per year), you might want to have an extra $50 withheld per paycheck ($1300/year) to cover what you'd otherwise owe at tax time.

FreeTaxUSA has been my go-to for years! It handles everything TurboTax does but for a fraction of the cost. Only downside is the interface isn't as pretty, but who cares when you're saving hundreds?