dmertz
Level 15

Retirement tax questions

It's a mistake to remove the earnings under these circumstances.  There is no requirement to do so when you have been assessed the 6% excess contribution penalties.  Your regular distribution to resolve this excess in 2020 and beyond should only be for the amount of the excess contributions, $5,900.  Because you will only be removing the $5,900 originally contributed, it will all be from contribution basis and therefore will be nontaxable.