Interestingly when the Roth IRA earnings get added to my 2020 AGI, that then reduces the max Roth IRA contribution even more. So, it seems wise to know what those excess contribution earnings were, add them to the AGI, then calculate again the max Roth IRA. Then withdraw enough from the Roth IRA to cover.If not, there would be another 6% penalty in almost a never-ending cycle.
Yes, that's an unfortunate consequence of being in the phase-out range for a Roth IRA contribution when there are gain attributable to the contribution. Recharacterizing the excess to be a traditional IRA contribution instead of obtaining a return of the excess Roth IRA contribution would avoid this complication.
