The interest is reported the year it is received- in your case 2021. The excess contribution would be removed on your 2020 return. You would not need to amend anything.
The IRS states:
Timely withdrawal of excess contributions by April 15
- Excess deferrals withdrawn by April 15 of the year following the year of deferral are taxable in the calendar year deferred.
- Earnings are taxable in the year they're distributed.
- There is no 10% early distribution tax, no 20% withholding and no spousal consent requirement on amounts timely distributed.
from Reporting IRA and retirement plan transactions & Tax on Early Distributions (and exceptions)
- Your withdrawal was by April 15 so it was taxable in 2020 and included on that return.
- Earnings from the excess contribution will be reported and taxable in 2021.
- No 10% penalty
@MOma42
[Edited 2/3/2021| 11:10 am PST]
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