assuming your return was not on extension, you misunderstand. that excess was not removed by the due date of 4/18 assuming you filed, but see exception next for late removal after filing, so you will pay a 6% penalty on the lesser of the excess contribution or the Fair value of the HSA account on 12/31/2022. I think your custodian wimped out by not computing the earnings on the excess, many do.
FROM PUB 969 HSA section exception
Note. If you timely filed your return without withdrawing the excess contributions, you can still make the
withdrawal no later than 6 months after the due date of your tax return, excluding extensions. If you do, file an
amended return with “Filed pursuant to section 301.9100-2” written at the top. Include an explanation of the
withdrawal. Make all necessary changes on the amended return (for example, if you reported the
contributions as excess contributions on your original return, include an amended Form 5329 reflecting that the withdrawn contributions are no longer treated as having been contributed),.
The earnings would be taxed.
now if your return was on extension different rules apply since you seem to have withdrawn the excess by the due date. no 6% penalty and only the earnings get taxed - no penalty.
