"then after October 15, 2021 but before the end of 2021 obtaining a regular distribution of $7,000 with no adjustment for earnings (or being able to apply the $7,000 as your contribution for 2021, if eligible) to eliminate the excess for 2021 "
This is my last time back at you, but I feel it necessary to make sure I fully understand what it is you are saying. The action you describe to take after 15OCT21 but before the end of 2021, is a required action on my part as the payment of the 6%, $420.00 penalty just allows the overcontribution to remain in the account, for the above stated time period. Therefore, it still needs to be corrected by seeking a ROTH IRA principal distribution, correcting the overfunding of tax year 2020, then simply redepositing the principle distribution back into the account under tax year 2021. I would presume then that a principle distribution has to be taken from a cash position, so between now and 15OCT2021 I would have to select the proper point to get $7000 to cash so I could take it out, to subsequently redeposit it?
That seems to make sense to me and it seems to make sense on what I have read in Fidelity's request to correct excess contribution document. That is what you are saying and the logic behind it?
