After thinking about it some more, I'm sure that your best approach would be to treat the distribution as a regular (code-J) distribution as I described above. Doing so will produce a lower tax liability over 2021 and 2022 than would the other approach because the excess contribution penalty for 2021 will almost certainly be less that the income tax and early-distribution penalty that you would pay on the $647 (I'm not sure why this is not $2,149 - $1,500 = $649, but no matter) that would otherwise have to be included in taxable income. You'll need to file 2020 and 2021 Forms 5329 to report the excess contribution and calculate the penalty for both years, then you'll report the regular distribution on your 2022 tax return by submitting the substitute code-J Form 1099-R (Form 4852) that I mentioned. When the regular distribution is included on your 2022 tax return, the the excess that carries forward from 2021 will be eliminated on your 2022 Form 5329 by the regular distribution.
