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I have the exact same situation, except I'm under 59. If I'm understanding correctly, what I need to do now is:

 

1) Report the federal withholding amount from the 2021 1099-R on my 2021 return. Unhappily, this causes Turbotax to increase my audit risk to High because I'm reporting a withholding amount that's higher than the taxable amount of the distribution (which is $0 since Turbotax sees the distribution as taxable in 2020 only)

 

2) File an amended 2020 return to report the taxable earnings on the excess contribution and pay the 10% early withdrawal penalty because I'm under 59