This is not the correct way to report it although this did get to the correct bottom line.
The IRS has a copy of your W2 and the information that you entered will not match. So you may receive a letter from the IRS asking about the changes to your W2 that were not on the form.
If you do receive this letter you should submit an amended return that will show all of the numbers on your W2 exactly as they appeared. Then the system will ask about the excess contributions and you will say that you pulled them out before the due date of the return so the additional $3,000 is added to your income and the correct amount is attributed to the 401K.
If you never receive the letter then don't worry about it. The bottom line was the same and you got everything to the correct spot.
Either way when you get the 1099-R in 2025 report it exactly as you receive it but change the taxable amount to the $10 in earnings. That way it will report correctly next year.
@Tax_right
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