You won’t have to pay the 6% tax if you withdraw an excess contribution made during a tax year and you also withdraw any interest or other income earned on the excess contribution. You must complete your withdrawal by the date your tax return for that year is due, including extensions.
If you timely filed your 2021 tax return without withdrawing a contribution that you made in 2021, you can still have the contribution returned to you within 6 months of the due date of your 2021 tax return, excluding extensions.
If you choose to pay the penalty, you then have two options:
- Apply the excess to next year: You can leave the excess contribution in the Roth IRA and apply it to next year’s contribution. Be sure to take this into account when determining your contribution amounts for next year
- Remove only the excess contribution after your tax deadline: After you file, you can request a regular distribution to remove the excess contribution (without earnings) between October 17 and December 31, 2023. You’ll have the 6% excess contribution penalty on the 2021 return, but you can keep the earnings in the Roth account, and can avoid the penalty on next year’s tax return
Here's an article that explains in more detail: What happens if I made an excess Roth IRA contribution because my modified adjusted gross income is ...
