Updated September 29, 2026. Quick answer: the code in Box 3 of Form 1099-SA tells the IRS what kind of distribution came out of the HSA, Archer MSA or Medicare Advantage MSA. Code 1 is the ordinary case. Codes 2 to 6 mark excess contributions, disability, death payments and prohibited transactions.
Form 8606 and Form 8889 for 2025, read line by line: Form 8889 lines 14a to 14c, Form 8889 lines 15 and 16 and Form 8889 lines 17a and 17b.
What the IRS tells the filer to do
Related guides: State tax on HSA contributions and State tax on 401(k) and IRA withdrawals.
The instructions for the organization that files the form say: “Enter the appropriate distribution code from the following list that shows the type of distribution.” The list sits under the heading “Distribution Codes for Distributions From HSAs, Archer MSAs, and Medicare Advantage MSAs”. The 1099-SA instructions read here carry the edition label Rev. December 2026 (the IRS file is dated 22-Dec-2025). Those are instructions to the payer, so they show what the code is meant to say about your withdrawal, not what tax follows from it.
The six codes
| Box 3 code | IRS list label | What the IRS says the code is for |
|---|---|---|
| 1 | Normal distributions | “Use this code for normal distributions to the account holder and any direct payments to a medical service provider. Use this code if no other code applies.” |
| 2 | Excess contributions | “Use this code for distributions of excess HSA or Archer MSA contributions to the account holder.” |
| 3 | Disability | “Use this code if you made distributions after the account holder was disabled (see section 72(m)(7)).” |
| 4 | Death distribution other than code 6 | “Use this code for payments to a decedent’s estate in the year of death. Also use this code for payments to an estate after the year of death. Don’t use with code 6.” |
| 5 | Prohibited transaction | The instructions give only a pointer: “See sections 220(e)(2) and 223(e)(2).” |
| 6 | Death distribution after year of death to a nonspouse beneficiary | “Use this code for payments to a decedent’s nonspouse beneficiary, other than an estate, after the year of death. Don’t use with code 4.” |
Codes 4 and 6 on an inherited account
For a payment made after the year of death, the instructions tie the code to who receives it: code 1 for a spouse who is the beneficiary, code 4 for the estate, and code 6 for a beneficiary who is neither. They add that the payer files “in the year you learned of the death of the account holder”. The date-of-death value goes in Box 4, covered on the Box 4 page.
Code 2 and Box 2
Code 2 is paired with Box 2. The instructions say: “If the amount in box 2 includes earnings on excess contributions, enter distribution code 2 in box 3.” How Box 2 works is on the Box 1 and Box 2 page.
Common mistakes
- Reading code 1 as proof the money was spent on medical costs. The instructions describe code 1 as the code to use when no other code applies.
- Reading a code as a tax verdict. The code describes the kind of distribution; the instructions do not say what tax follows.
- Expecting a code 4 or code 6 on the same payment. The instructions say not to combine them.
Related: 1099-SA Box 1 Gross Distribution: What It Includes, 1099-SA Box 4: FMV on Date of Death (Inherited HSA), 1099-Q Box 7 Distribution Codes 1 to 6 Explained, the inherited HSA rules, and how an excess HSA contribution gets fixed.
Every box in one place: the 1099-SA and 1099-Q boxes table. If your withdrawal came from an IRA or 401(k), see the Form 1099-R Box 7 codes.
Figures verified against the IRS Instructions for Forms 1099-SA and 5498-SA (Rev. December 2026), the IRS Instructions for Form 1099-Q (Rev. April 2025) and the IRS About Form 1099-SA and 1099-Q pages on September 30, 2026.
Sources
- IRS, Instructions for Forms 1099-SA and 5498-SA (Rev. December 2026): https://www.irs.gov/pub/irs-pdf/i1099sa.pdf
- IRS, Instructions for Form 1099-Q (Rev. April 2025): https://www.irs.gov/pub/irs-pdf/i1099q.pdf
- IRS, About Form 1099-SA: https://www.irs.gov/forms-pubs/about-form-1099-sa
- IRS, About Form 1099-Q: https://www.irs.gov/forms-pubs/about-form-1099-q
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How our partner relationships workSource: the IRS instructions for the filer of each form, read at irs.gov on September 29, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.