Yes, this is legal because the code on the 1099-R 2021 that you get in 2022 tells you and the IRS that you have to put it on your 2020 return. The 2021 code P will not do anything on your 2021 return. The only information that gets on your 2021 tax return from the Form 1099-R 2021 with code P are taxes withheld.
Also the IRS states:
How to treat withdrawn interest or other income from withdrawal of excess contribution.
You must include in your gross income the interest or other income that was earned on the excess contribution. Report it on your return for the year in which the excess contribution was made.
@hullian
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