Checked with Vanguard again and after multiple rounds of back and forth with their tax dept they tell me that since the earnings accrued in 2020 (even though the contribution was for 2019) the code shall be 81 only and it is taxable in 2020. If it accrued in 2019 then it would be for 2020. I told them about IRS publication 590A.
What choice do i have now? Go with what VG says or add a substitute 1099R with the earnings on 2019 tax return? And in which year do i send the 5329?
Thanks,
