At this point there is nothing to do except be prepared to provide explanation if the IRS ever questions the contribution and its return.
In 2020 TurboTax you should have entered the Roth IRA contribution, indicated that you had it returned, then when prompted by TurboTax, prepared an explanation statement indicating that you originally contributed $7000 on whatever date in 2021 that occurred and that, because the value of the Roth IRA had dropped, the adjusted amount distributed was $6,895.95 on whatever date that occurred in 2021.
Assuming that there is no tax withholding shown on the Form 1099-R, you can ignore it. Make sure to retain this form since it shows $0 in box 2a which will help substantiate your assertion that there was a drop in the value of the Roth IRA.
