U.S. · Tax forms
1099-SA box 3 distribution codes.
Six codes, one for each kind of HSA or MSA withdrawal.
Box 3 of Form 1099-SA carries a single digit that tells the IRS what kind of distribution came out of your HSA, Archer MSA or Medicare Advantage MSA. Code 1 is a normal distribution and is used when no other code applies. Codes 2 to 6 cover excess contributions, disability, death, prohibited transactions and death distributions to a nonspouse beneficiary.
Look up a box 3 code
Result
Box 3 distribution codes
| Code | Meaning | When the payer uses it |
|---|---|---|
| 1 | Normal distribution | Normal distributions to the account holder and direct payments to a medical service provider. Used if no other code applies. Also used after the year of death when the beneficiary is the spouse. |
| 2 | Excess contributions | Distributions of excess HSA or Archer MSA contributions to the account holder. Also used when an HSA is closed under the USA PATRIOT Act customer identification rules. |
| 3 | Disability | Distributions made after the account holder was disabled (section 72(m)(7)). |
| 4 | Death distribution other than code 6 | Payments to a decedent’s estate in the year of death, and payments to an estate after the year of death. Not used with code 6. |
| 5 | Prohibited transaction | See sections 220(e)(2) and 223(e)(2). |
| 6 | Death distribution after year of death to a nonspouse beneficiary | Payments to a nonspouse beneficiary, other than an estate, after the year of death. Not used with code 4. |
What box 3 does not tell you
The payer is not required to figure the taxable amount. The instructions say the trustee enters the total distribution in box 1 and is "not required to determine the taxable amount." Box 2 holds only earnings on excess contributions returned by the due date of the return. Box 5 is a checkbox for HSA, Archer MSA or Medicare Advantage MSA. So a code 1 does not mean the money is tax free: you decide that on Form 8889.
How an HSA withdrawal gets taxed
The Form 8889 instructions say distributions used exclusively for qualified medical expenses of you, your spouse or dependents are excludable from gross income. Any part not used for qualified medical expenses is included in income and is subject to an additional 20% tax unless an exception applies. The 20% tax does not apply to distributions made after the account beneficiary dies, becomes disabled or turns age 65. Form 8889 line 14a is the total from 1099-SA box 1.
Worked example
Jordan, age 45, receives a 1099-SA with $4,000 in box 1 and code 1 in box 3. He paid $3,200 of qualified medical expenses from the account. The other $800 is included in income and, because none of the age 65, disability or death exceptions apply, carries the additional 20% tax: $800 × 20% = $160. His code is still 1, which only says it was a normal distribution. To see how much you can put in, use the HSA contribution limit calculator.
Mistaken distributions
If an HSA distribution was made because of a mistake of fact due to reasonable cause, the beneficiary may repay it by the due date (without extensions) of the return for the first year they knew or should have known of the mistake. The instructions say a repaid mistaken distribution is not included in gross income and is not subject to the additional 20% tax, and the payer should not report it on Form 1099-SA. Trustees do not have to allow these returns.
More form decoders
Other pages in this set: 1095-B vs 1095-C, 1099-MISC Boxes Decoder, 1099-C Box 6 Codes, Form 1098 Boxes Decoder. The 1099-R box 7 lookup and W-2 box 12 lookup cover the same kind of question for those forms.
Sources
- Instructions for Forms 1099-SA and 5498-SA: Box 1 to 5 instructions, distribution codes, mistaken distributions. Read November 2, 2026.
- Instructions for Form 8889 (2025): Part II HSA distributions and the additional 20% tax. Read November 2, 2026.
The IRS labels the 1099-SA instructions 12/2026; the Form 8889 instructions are the 2025 edition. IRS pages last reviewed April 30, 2026.
Frequently asked questions
What does code 1 mean on a 1099-SA?
Code 1 is a normal distribution: a payment to the account holder or directly to a medical provider. The trustee uses it if no other code applies.
Is a 1099-SA distribution taxable?
It depends on how you used it. Amounts used exclusively for qualified medical expenses are excludable. The rest is included in income and generally carries an additional 20% tax, unless you were 65, disabled or died. Report it on Form 8889.
What is 1099-SA code 5?
Prohibited transaction. The instructions refer to sections 220(e)(2) and 223(e)(2) for the rules.
What is the difference between codes 4 and 6?
Code 4 is a death distribution paid to an estate. Code 6 is a death distribution after the year of death to a nonspouse beneficiary other than an estate. They are not used together.
Does the payer report the taxable amount?
No. The trustee reports the gross distribution in box 1 and is not required to figure the taxable amount. You figure that on Form 8889.
Not tax advice
This page summarizes IRS instructions, mostly written for the people who prepare the form, and is not tax, legal or financial advice. The payer, a CPA or an enrolled agent can confirm what a box or code means for your return. Everything runs in your browser; nothing you enter is sent anywhere.