If you treat the $2,149 distribution as a regular distribution, it will be a distribution of contribution basis, free of income tax and free of any early-distribution penalty. Yes, this will require Form 8606 Part III to be included in your 2022 tax return. Your 2022 tax return will also include Form 5329 as I described previously with the excess from 2020 (carried through 2021) on line 18 and $2149 on line 20, reducing the excess to zero for 2022.
If you ask Schwab to report the $2,149 as a regular distribution instead of as a return of contribution, there is nothing for Schwab to calculate. You have already received the distribution. When correcting an excess contribution after the due date of your tax return there is no earnings calculation to be done. However, as I said before, I would not have confidence in Schwab being able to properly change the reporting given that they goofed the whole thing up from the start by not rejecting your original request.
Form 5498 has nothing to do with this.
