Since the contributions were made in 2020 and were not returned until 2021, nothing about this is reportable with code 8.
The amount that you can request to be distributed as a return of contribution can be up to the entire amount of the contribution, not just the amount of the contribution that is excess. If all of the contribution is returned, all of the associated earnings are part of the distribution of the returned contribution and are to be included in the gross and taxable amounts of the Form 1099-R that reports the distribution of the returned contribution.
To my knowledge, the IRS has never resolved the ambiguity that exists with regard to whether the deadline for obtaining a return of the 2019 contribution made in 2020 is the due date of the 2019 tax return or the due date of the 2020 tax return. Over the years I've come to opposite conclusions on this, so I generally leave it up to the IRA custodian to decide. Because section 219(f)(3) creates the legal fiction that a contribution made for the previous year is deemed to have been made on the last day of the previous year, my current leaning is that the deadline was the due date of the 2019 tax return, which differs from the treatment being provided by the IRA custodian in this case. However, it's not clear that this legal fiction applies to section 408(d)(4) for a return of contribution.
