Hello, As long as the matter is settled prior to April 15 of the tax year following the excess contribution tax year... Yes, Vanguard will return the gains to you, along with the excess contribution. Vanguard will send out 1099-R for the gains in the Tax year of the distribution. Since the distribution will take place in tax year 2021 the tax ramifications will be on your 2021 return. At that time tubrotax will calculate the tax ramifications. No need to be concerned with your 2020 tax filing even though the excess contribution took place during the 2020 tax year. No big deal.
