To avoid penalty with a "return of contribution" distribution any earnings attributed to the excess must also be returned. You can sell the stock withing the IRA and distribute the contribution amount plus earnings or remove a "like kind" amount of stock equal to that amount.
As an alternative if there has been a lot of gain that exceeds 6% of the excess, then you can delay removing the excess (not the earnings) until after the extended due date (Oct 15, 2021) and just pay the 6% penalty now with the 2020 tax return. If you pay the 6% penalty then the earnings can stay in the account.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
