Don’t withdraw the excess. The deadline to cure the excess contribution by withdrawing it was May 17, 2021 (the regular tax deadline) or October 15, 2021 (if you had a deadline extension). Both of those dates are passed.
You must file an amended 2020 return that calculates and reports the excess contribution and that you did not withdraw it in time. You will be assessed a 6% penalty on the amount of excess contribution.
You will be assessed a further 6% penalty on the excess amount every year that the excess remains on corrected. The only way to correct the excess after the tax filing deadline is by applying the excess toward a future year’s contribution. For example, suppose that due to your income, your contribution limit for 2021 is $4000, and the excess from 2020 was $1000. If you only contributed $3000 in 2021, you could count the $1000 excess from 2020 as part of your 2021 contribution limit. That would clear the excess and you would not be assessed a future penalty.
