Thank you so much for your quick response. I was hoping I would avoid the 2nd year 2020 contribution's 6% penalty by taking the $7k distribution before the 2021 tax due date of Oct 15,2022. But it looks like it doesn't work that way? Sounds like once you go past the first year, you have no choice but to take the second year as a normal distribution and not a return of contribution, even if pulled out before the Oct. due date?
In that case will I be allowed to keep the earnings for both years in the Roth with no tax consequences, and just take the distribution of the original $7k contribution? Also, can you tell me if I will be assessed interest and late penalties on the $420(6% amount)? I might still be ahead instead of taking the earnings as regular income. Sounds like earnings distribution on excess contribution, is treated differently, then earnings taken on just a normal distribution if Roth held for over 5 years.
Again, thank you and appreciate the help. I won't make this mistake again!!
