Your understanding is incorrect. It was an excess Traditional IRA contribution, not a Roth. (Moving it to a Roth does not make it a Roth contribution). You had until Oct 15, 2021 to remove it plus earnings form the Traditional IRA. Since that was not done and is no longer possible, it can only be reported on your 2020 tax return with a 5329 excess not removed and pay the 6% penalty on the excess. The excess must still be removed as a normal distribution from the Roth since the money was not eligible for conversion. If not removed by Dec 31, 2021 then you will owe another 6% penalty on the excess Traditional IRA contribution.
(For tax purposes and the penalty, the money was never removed from the Traditional IRA since the conversion was not allowed. But the IRA custodial cannot return money from the Traditional IRA that is not physically there, all they can do is make a normal (taxable) distribution to you from the account that the money is currently in.)
**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.**
