@wag1
OK, let me try again. Apparently some of my thinking on this was wrong.
First, how did you already max out your 2021 contribution? By separate payment or by payroll? My employers have all wanted me to make contributions that were more or less equally spread out. Did you do a large salary reduction agreement for just a few pay periods then cancel it?
I think the simplest thing is to pay the penalty for 2020 and 2021 and fix the problem in 2022.
1. The excess of $X was subject to a penalty in 2019, you said you already paid it.
2. Because you contributed the max for 2020, you lost the opportunity to apply the $X overage toward your 2020 contribution. So the $X is still considered an excess, and still subject to the 6% penalty.
The only way to fix this on your 2020 return is to have spent down your account to zero on medical costs (which defeats the purpose of maximizing your contributions), or take a corrective distribution and paying 20% tax. 20% is a lot more than 6%. So just pay the 6% penalty instead.
3. If you already maxed out your 2021 contributions via payroll reduction, they will show on your W-2, and you will be maxed out for 2021. That means you will pay another 6% penalty on $X from 2019.
4. In 2022, contribute $X less than your maximum eligibility, that will close out the mess.
You will have paid 12% penalty on the money (plus the 6% that it is too late to fix). The alternative is to take a corrective distribution in the amount of $X and pay 20% tax on it, and 12% is less than 20%.
However, if you paid your 2021 contributions from your own funds, you can request a return of $X before December 31. It won't count against you on your 2021 tax return if it was your own money returned by December 31, in the way that it does count against you if it was payroll contributions returned after the end of the year, and would be able to zero out the excess in 2021 instead of 2022.
You could also consider asking your employer if they will help you correct the problem. If you withdrew $X as an excess contribution for 2021 (not 2020), and returned it to your employer, and they then added it to your regular pay and taxed it accordingly, your W-2 at the end of the year would show the smaller amount that would allow you to clear the penalty. But this would be a lot of paperwork and it would take a special employer to agree to help you out in this way.
